PepsiCo, Inc. (PEP) reported its third-quarter results on Dec. 8, 2025, facing ongoing margin pressures amid a challenging cost environment. The company’s core gross margin fell by 160 basis points (bps) year-over-year, while the adjusted operating margin contracted by 60 bps. These declines highlight structural inefficiencies and elevated costs in North America, which have affected overall profitability.
Despite these challenges, PepsiCo targets organic revenue growth of 2-4% in 2026 and expects at least 100 basis points of core operating margin expansion over the next three years. The focus remains on productivity improvements, cost efficiencies, and strategic reinvestments to bolster long-term profitability.
Shares of PepsiCo have increased by 8.9% in the past six months, compared to the beverage industry growth of 1.6%. The company currently trades at a forward price-to-earnings ratio of 16.82X, below the industry average of 18.15X.
