PepsiCo Inc (NASDAQ:PEP, XETRA:PEP) reported stronger-than-expected first quarter results on Thursday, supported in part by a rebound in its North American food division, while analysts pointed to early signs that recent pricing and product strategies are gaining traction.
The company posted adjusted earnings per share of $1.61, ahead of Wall Street expectations of $1.55.
Revenue reached $19.44 billion, also exceeding forecasts of $18.94 billion.
A key development during the quarter was a return to volume growth in PepsiCo’s North American food business, which had been under pressure in prior periods. The improvement followed pricing adjustments and affordability initiatives across snack brands, including Doritos and Lay’s.
The company cited effective pricing, a modest increase in volumes, and contributions from foreign exchange and portfolio changes as drivers of growth.
In North America, both food and beverage segments showed sequential improvement in revenue and volume trends. PepsiCo said innovation efforts and affordability initiatives supported renewed demand in its snacks business, while beverage volumes also improved year over year.
International operations also performed steadily, with accelerating revenue growth across Asia Pacific, Europe, the Middle East and Africa, and its international beverages franchise. Latin America foods remained stable.
Profitability strengthened over the period, with operating profit rising 24% and margins expanding 210 basis points. Core operating profit increased 9%, supported by productivity savings, revenue growth, and currency tailwinds, partially offset by higher operating costs.
PepsiCo reiterated its full-year 2026 outlook, maintaining expectations for organic revenue growth of 2% to 4% and core constant currency EPS growth of 4% to 6%.
“We are pleased with our first-quarter results, which featured an acceleration in both net revenue and organic revenue growth – with a notable improvement in convenient foods organic volume,” Pepsi CEO Ramon Laguarta said.
“We are encouraged with the resilience of the International business while North America continued to make progress in the first quarter. As we look ahead, we aim to successfully execute our commercial plans and tightly manage costs to help fund investments to accelerate growth.”
Jefferies analysts described the report as a “good result” with maintained guidance, noting a solid top-line beat of 2.6% organic growth, about 50 basis points above expectations. They highlighted sequential improvement in both North American food and beverage segments.
A key point in their assessment was a return to positive volume growth in Frito-Lay, which grew 2%. Jefferies said this marks an early sign that price reductions and innovation initiatives are starting to work.
They also pointed to foreign exchange gains of 3.4 percentage points and inorganic contributions of 2.5 percentage points, which helped drive an EPS beat to $1.61, roughly 9% above expectations.
Despite the stronger-than-expected performance, analysts noted that macroeconomic uncertainty led PepsiCo to keep guidance unchanged.
Jefferies added that if positive top-line trends continue, temporary cost pressures may become less significant in shaping the outlook.
Shares of Pepsi added 2.4% at about $159 following the release of its earnings report.