PepsiCo Stock (PEP) Eyeing Breakout Ahead of Earnings – What To Expect

PepsiCo’s stock (NASDAQ:PEP) has started the year in strong form, adding 9.12% YTD and recapturing the $150 level after an earlier pullback. The company reports fiscal fourth-quarter 2025 and full-year results this morning, before market open, with plenty of eyes on the print.

The quarter provides the read on whether the company’s strategic pivot to Zero Sugar products and recent acquisitions of Siete Foods and Poppi can offset persistent volume pressure in North America and macroeconomic headwinds in international markets.

Consensus sits at $2.24 EPS on $29.0B revenue, representing 14.3% earnings growth against a modest 4.4% revenue increase, implying that margin expansion must materialize to justify the multiple.

The bar is set against management’s December preliminary outlook calling for 2026 organic revenue growth of 2% to 4% and core EPS growth of 5% to 7%, a framework that requires the fourth quarter to demonstrate execution credibility after three quarters that delivered only 1.5% organic revenue growth while core EPS declined 3.5%.

Elliott Investment Management’s $4 billion stake disclosed in September adds a catalyst for operational improvement, but the near-term question is whether pricing architecture can sustain margins without further eroding volumes in a consumer environment still constrained by inflation and trade-down behavior.

The result will determine whether PepsiCo’s valuation premium to peers remains defensible.

Consensus Estimates

The fourth-quarter consensus of $2.24 EPS sits at the upper end of the estimate range, leaving limited room for upside surprise relative to the 11-cent spread between low and high forecasts. The 14.3% year-over-year EPS growth expectation contrasts sharply with the modest 4.4% revenue growth, implying that analysts are modeling approximately 600 basis points of operating leverage or margin expansion to bridge the gap.

For the full year, consensus of $8.12 EPS aligns closely with management’s updated framing from October that implied roughly a 0.5% core EPS decline versus 2024, down from the mid-single-digit growth originally guided in February 2025. The narrow estimate range for fiscal 2025 ($8.08 to $8.13) suggests the Street has converged on a low-conviction baseline, with differentiation likely to come from 2026 guidance rather than backward-looking delivery.

Management Guidance & Commentary

“We expect low single-digit organic revenue growth in full-year 2025 and flat core EPS on a constant currency basis.”

PepsiCo’s April 2025 guidance reset marked the clearest inflection point in the company’s earnings narrative over the past year. Management moved from expecting mid-single-digit core constant-currency EPS growth to approximately even performance versus 2024, explicitly citing tariff-driven supply chain cost pressure and softer consumer conditions.

In December 2025, PepsiCo provided preliminary 2026 guidance calling for 2% to 4% organic revenue growth and 5% to 7% core constant-currency EPS growth. That framework represents a meaningful step-up from 2025’s low-single-digit organic revenue performance and flat-to-down earnings trajectory, but it requires validation through fourth-quarter execution and commentary that supports the acceleration thesis.

PepsiCo’s corporate campus where management will address 2026 guidance and strategic priorities

Analyst Price Targets & Ratings

Wall Street maintains a constructive view with 70% of analysts rating shares a Buy or Strong Buy. The consensus target of $159.29 implies modest 2.6% upside from current levels, reflecting cautious optimism tempered by execution uncertainty around the 2026 acceleration thesis.

Sector & Peer Comparison

PepsiCo trades at a 28.2x trailing P/E ratio, a premium to most consumer staples peers despite materially lower profit margins at 7.8%. The valuation gap is most pronounced against Mondelez (22.1x), Keurig Dr Pepper (19.8x), and General Mills (16.4x), companies that face similar demand headwinds but trade at discounts reflecting lower growth expectations.

Earnings Track Record

PepsiCo has beaten core EPS estimates in 17 of the last 20 quarters, an 85% success rate that establishes a baseline expectation for modest upside delivery. The track record reveals that PepsiCo’s stock reactions are more sensitive to guidance and forward commentary than to backward-looking beats.

Post-Earnings Price Movement History

PepsiCo’s average post-earnings move of 0.7% sits well below the 4.1% implied move currently priced by options, indicating that historical volatility has been muted relative to market expectations. The Q4 2024 reaction illustrates the risk of a guidance-driven selloff despite a beat—the 0.5% EPS upside was offset by disappointing 2025 outlook, resulting in a 1.0% decline.

Expected Move & Implied Volatility

The options market is pricing a 4.1% move in either direction following the February 3 earnings report, well above the 0.7% average historical post-earnings reaction. The gap between implied volatility (18.5%) and 30-day historical volatility (14.2%) suggests that options traders are pricing in event risk beyond what the stock’s recent trading pattern would justify.

PepsiCo’s Zero Sugar portfolio represents a key growth driver as the company pivots toward health-conscious products

What to Watch

The North America beverage volume metric carries the highest weight because it directly tests whether PepsiCo’s strategic pivot to Zero Sugar products is working. The company has allocated the majority of its marketing budget to promoting Zero Sugar variants, targeting Gen Z and health-conscious consumers. If volume growth remains negative, it would suggest that health and wellness trends represent a structural headwind that marketing alone cannot offset.

Operating margin expansion is the mathematical requirement for the fourth-quarter consensus to be achievable. Revenue growth of 4.4% cannot support EPS growth of 14.3% without significant margin improvement through either gross margin gains or operating expense leverage. The 2026 guidance framework is the single most important forward-looking disclosure that will determine whether the stock deserves its current premium valuation.