Food and beverage company PepsiCo (NASDAQ: PEP) reported Q2 CY2026 results exceeding the market’s revenue expectations, with sales up 6.4% year on year to $24.18 billion. Its non-GAAP profit of $2.20 per share was 1.2% below analysts’ consensus estimates.
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PepsiCo (PEP) Q2 CY2026 Highlights:
- Revenue: $24.18 billion vs analyst estimates of $23.99 billion (6.4% year-on-year growth, 0.8% beat)
- Adjusted EPS: $2.20 vs analyst expectations of $2.23 (1.2% miss)
- Operating Margin: 16.6%, up from 7.9% in the same quarter last year
- Free Cash Flow Margin: 6.2%, up from 4.8% in the same quarter last year
- Organic Revenue rose 2.4% year on year (miss)
- Sales Volumes rose 1% year on year (-1.5% in the same quarter last year)
- Market Capitalization: $196.4 billion
Company Overview
With a history that goes back more than a century, PepsiCo (NASDAQ: PEP) is a household name in food and beverages today and best known for its flagship soda.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $96.9 billion in revenue over the past 12 months, PepsiCo is one of the most widely recognized consumer staples companies. Its influence over consumers gives it negotiating leverage with distributors, enabling it to pick and choose where it sells its products (a luxury many don’t have). However, its scale is a double-edged sword because there are only a finite number of major retail partners, placing a ceiling on its growth. For PepsiCo to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.
As you can see below, PepsiCo grew its sales at a sluggish 2.4% compounded annual growth rate over the last three years as consumers bought less of its products. We’ll explore what this means in the “Volume Growth” section.
This quarter, PepsiCo reported year-on-year revenue growth of 6.4%, and its $24.18 billion of revenue exceeded Wall Street’s estimates by 0.8%.
Looking ahead, sell-side analysts expect revenue to grow 3.3% over the next 12 months, similar to its three-year rate. This projection is underwhelming and suggests its newer products will not catalyze better top-line performance yet.
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Volume Growth
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
To analyze whether PepsiCo generated its growth from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.
Over the last two years, PepsiCo’s average quarterly sales volumes have shrunk by 1.3%. This decrease isn’t ideal as the quantity demanded for consumer staples products is typically stable. Luckily, PepsiCo was able to offset fewer customers purchasing its products by charging higher prices, enabling it to generate 1.9% average organic revenue growth. We hope the company can grow its volumes soon, however, as consistent price increases (on top of inflation) aren’t sustainable over the long term unless the business is really, really special.
In PepsiCo’s Q2 2026, sales volumes jumped 1% year on year. This result was a well-appreciated turnaround from its historical levels, showing the company is heading in the right direction.
Key Takeaways from PepsiCo’s Q2 Results
It was good to see PepsiCo narrowly top analysts’ revenue expectations this quarter. On the other hand, its organic revenue growth, gross margin, and EPS all fell slightly short of Wall Street’s estimates. Overall, this quarter could have been better. The stock remained flat at $143.45 immediately following the results.
So should you invest in PepsiCo right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
