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PepsiCo (NYSE: PEP) stock was rising on Thursday even though the beverage company saw sales in the U.S. and North America decline.

However, the maker of Pepsi Cola got a lift from its international business, which allowed it to top Wall Street earnings and revenue estimates.

• Revenue: $23.9 billion, up 3% year-over-year and better than estimates of $23.8 billion.
• Net income: $2.6 billion, down 10% year-over-year.
• Earnings: $1.90 per share, down 11% year-over-year.
• Adjusted earnings: $2.29 per share, down from $2.31 per share in Q4 2024 and better than estimates of $2.26 per share.

While earnings were impacted by one-time costs, including impairments from divestments and restructuring, PepsiCo did have higher expenses.

Costs of sales were about 7% higher, which means it paid more for the ingredients and supplies. SG&A expenses were also up, but only about 1%.

North American sales drop, but international sales rise

With higher costs of sales, PepsiCo reported a 4% increase in its effective net pricing, which means it raised its prices across products to account for the higher costs.

In North America, PepsiCo Foods NA pricing increased 2% while PepsiCo Beverage NA pricing rose 6%. The higher pricing also helped PFNA and PBNA offset lower sales volume. PFNA sales volume dropped 4% in the quarter while PBNA sales fell 3%. Yet, PFNA revenue was flat, while PBNA revenue was up 2%.

The primary reason for the overall revenue gain was international sales, particularly in the EMEA region. Beverage sales volume in EMEA increased 1.5% while food volume was down 1%. But revenue jumped 9% in EMEA, helped by 6% higher pricing and favorable foreign exchange rates. Also, operating income in EMEA rose 1%, while all other segments other than Asia-Pacific were down. Asia-Pacific saw a 3% jump in food volume sales, a 2% revenue increase, and a 16% earnings rise.

Going forward, the company will focus on pricing and cost structure.

“As we look ahead to the balance of this year and beyond, our top priorities are to accelerate growth and aggressively optimize our cost structure. To accomplish this, we are introducing a strong pipeline of innovation to accelerate portfolio transformation, continuously sharpening our price pack architecture to provide good value to consumers, and right sizing our entire cost base to help fund our activities,” PepsiCo Chairman and CEO Ramon Laguarta said.

Is PepsiCo stock a buy?

Looking ahead, PepsiCo expects low-single-digit increase in organic revenue for the full fiscal year, with core constant currency earnings flat year-over-year.  

This implies a 0.5% decline in core EPS in fiscal 2025, up from the previous guidance of a 1.5% EPS decline.

There is not a ton of upside for PepsiCo stock, as several analysts have lowered their targets in recent weeks. But what PepsiCo does offer is a great dividend that it has raised for 52 straight years, and the steady, solid growth of a consumer staple that could provide portfolio ballast in a choppy market.

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