TLDR
- PepsiCo reported Q2 earnings of $2.12 per share, beating analyst expectations of $2.03 per share
- Revenue rose 1% to $22.73 billion, topping forecasts of $22.28 billion
- Company improved full-year profit outlook, now expecting core EPS to decline 1.5% versus previous 3% drop forecast
- Weaker U.S. dollar providing foreign exchange benefits for international business
- North America beverage sales showed 1% organic growth after previous quarter’s 2% decline
PepsiCo delivered a solid second quarter performance that exceeded Wall Street expectations. The company posted earnings of $2.12 per share, well above the $2.03 analysts had predicted.
Revenue climbed 1% to $22.73 billion, beating the expected $22.28 billion. This marked a welcome turnaround after recent quarters of declining sales.
The Gatorade maker’s shares jumped 1.6% in premarket trading following the earnings release. The stock has been down about 11% for the year before this morning’s gains.
PepsiCo, $PEP, Q2-25. Results:
📊 Adj. EPS: $2.12 🟢
💰 Revenue: $22.7B 🟢
📈 Net Income: $1.26B
🔎 International business momentum offset weaker North America performance; cost optimization and portfolio innovation planned for H2 pic.twitter.com/UQxkbGSAT3— EarningsTime (@Earnings_Time) July 17, 2025
CEO Ramon Laguarta highlighted how currency movements have shifted in the company’s favor. The U.S. dollar has weakened considerably this year, providing a boost to PepsiCo’s international operations.
“Core USD EPS outlook has improved versus our previous expectations as foreign exchange headwinds have moderated, due to the weakening of the U.S. dollar,” Laguarta said in a statement.
The dollar index has dropped 9% in the first half of 2025. This represents its worst first-half performance since 1973.
PepsiCo’s international business accounts for roughly 40% of total net revenue. A stronger dollar earlier in the year was expected to hurt profits from overseas operations.
Currency Benefits Drive Improved Outlook
The weaker dollar has allowed PepsiCo to raise its profit forecast for the full year. The company now expects core earnings per share to fall just 1.5% compared to the previous projection of a 3% decline.
This improvement comes as the company continues working to adapt to changing consumer preferences. PepsiCo has been expanding its healthier drink options and snack varieties to meet demand.
The company recently acquired prebiotic soda brand Poppi as part of this strategy. It has also launched new flavors of popular snacking brands like Lay’s and Doritos.
Price-conscious consumers have pushed PepsiCo to offer more products at lower price points. The company had raised prices over recent years to protect margins from inflation.
Beverage Sales Show Signs of Recovery
The North America beverage unit posted 1% organic revenue growth in the second quarter. This followed a 2% decline in the previous three-month period.
The beverage segment has been losing market share for some time. Consumer preferences have shifted toward healthier options and away from traditional sodas.
PepsiCo’s snack business has also faced headwinds from weak consumer spending. Inflation concerns and changing health priorities have affected demand for ultra-processed foods.
In the first quarter, organic sales for the North America food unit declined 2% year-over-year. While beverage sales increased 1%, most of that came from price increases rather than volume growth.
Beverage sales volume actually shrank 3% in the first quarter. This trend has been a persistent challenge for the company.
Analysts had muted expectations heading into the second quarter results. Concerns about potential tariffs driving up supply chain costs weighed on sentiment.
The company continues to face competitive pressure from rival Coca-Cola. PepsiCo shares have lagged behind Coca-Cola’s 10% gain over the past year.
From its recent high in May 2024, PepsiCo stock had fallen 26% to $135 before Thursday’s earnings report. The S&P 500 has gained 18% over the same period.
BNP Paribas Exane analyst Kevin Grundy recently trimmed his target price to $136 but maintained a Neutral rating. The stock trades at 17 times forward earnings, roughly a 10% discount to other consumer staples peers.
Deutsche Bank analyst Steve Powers maintains a more optimistic view with a Buy rating and $148 target price. He believes the stock’s intrinsic value exceeds its current trading price.
The company’s international business momentum contributed to the stronger-than-expected quarterly results. Foreign exchange benefits are expected to continue supporting earnings if the dollar remains weak.
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