PepsiCo now expects 2026 sales to grow about twice as fast as core earnings

On Yahoo Finance's figures, net revenue up about 6% against core EPS growth of 2.5% to 3% means sales grow about 2.2 times as fast as earnings at the midpoint ^[4][18][12]. CNA's pair, organic revenue up about 3% against currency-adjusted core EPS up 1% to 2%, gives a ratio of 2 ^[8][9][13].

The quarter before the cut was a thin beat. Adjusted earnings came in $0.05 a share, or about 2%, above consensus, and revenue roughly $270 million above it ^[15]. The quarter also included $178 million of tariff refunds ^[11]. Yahoo Finance did not report whether those refunds are counted in the adjusted figure. The shares were little changed before the open by Yahoo Finance's account, and up about 1% by CNA's ^[16][17].

I think a share price that holds through a forecast cut by more than half at the midpoint ^[21] is a bet on North America, the region the company itself singles out. "We continue to operate with a high sense of urgency to sustainably improve the company's financial and marketplace performance (most notably in North America)," PepsiCo chief executive Ramon Laguarta said ^[7]. CNA attributed the cut to sluggish demand there for snacks and beverages, and to rising input costs ^[3].

The cost programme already has a stated use. "Additional structural cost reduction actions are being identified and will be implemented in the coming months to help fund investments that aim to accelerate organic revenue growth and mitigate the impacts of rising input cost inflation," Laguarta said ^[5]. Margin is not among the named uses. On that wording, the 280 basis points of North American margin lost to this year's price cuts ^[6] has to come back through the 15% price increase ^[19].

Three outcomes are open. If input inflation eases and the price increase sticks, part of the 280 basis points returns and EPS growth could beat the new range. In the second case, volumes fall at the higher prices and the savings go to defending market share. The third is the plan as written: the savings arrive, get spent as Laguarta described, and core EPS keeps growing at about half the rate of sales ^[12]. I think the third is the base case, because it is the one the chief executive has put in writing. The first is the counter-thesis, and it depends on input costs falling. The view is wrong if North America's core operating margin recovers a large share of the 280 basis points within two quarters while organic growth holds near 3% ^[8].