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PepsiCo (PEP) reported Q1 adjusted earnings per share of $1.48, just below analyst expectations of $1.49. Revenue slightly exceeded forecasts at $17.92 billion, compared to the $17.77 billion anticipated. However, net income dropped 10% year over year to $1.83 billion. The company also reduced its 2025 outlook, citing rising supply chain costs, tariffs, and economic uncertainty.

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PepsiCo (PEP)

CEO Ramon Laguarta emphasized the unpredictable global trade environment and subdued consumer demand, noting these challenges are likely to persist.

Weak North America Performance

Pepsi’s North American business continues to face headwinds. Overall volumes in the region declined, with beverages down 3% and food down 1%. Consumers, impacted by inflation, have shifted toward value-oriented products, changing shopping behaviors and pressuring premium brands.

The company plans to rebound by expanding brands such as Simply, Sabra, and Siete. It also recently acquired Poppi, a prebiotic soda brand, to capture wellness-driven demand.

Pepsi is responding to the growing GLP-1 user base by introducing more protein-rich products. It’s also reformulating snacks like Lay’s and Tostitos to remove synthetic dyes following new FDA guidelines, aiming for a full transition to natural coloring by 2026.

Global Markets and Organic Growth

International sales helped offset domestic weakness. Organic revenue, which excludes currency impacts and acquisitions, rose 1.2%. However, global volume for foods dropped 3%, and beverage volume was flat. PepsiCo Beverages North America saw a 1% dip in organic revenue to $5.91 billion.

Despite ongoing volatility, the company reaffirmed its guidance for low-single-digit organic revenue growth for the year.

Dividend and Stock Performance

PepsiCo offers a forward dividend of $5.42 per share, yielding 4.01%, with an ex-dividend date of March 7, 2025. As of midday trading on April 25, the stock was down 1.5% at $133.28.

PEP shares have underperformed the broader market, falling 11.58% year-to-date and 22.05% over the past year, compared to the S&P 500’s 8.81% gain.

Analyst Perspective

Barclays analyst Lauren Lieberman pointed to the rare miss as a sign of deeper structural challenges. “There’s always been a way to deliver the bottom line,” she said, noting that tariffs and execution issues may weigh more heavily than expected in the months ahead.

With earnings scheduled between July 9–14, 2025, investors will watch closely to see if turnaround efforts in North America begin to show results.

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