Is PepsiCo Stock Stronger Than It Looks?

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The international arm of PepsiCo (PEP) is a business that is easy to miss, and the stock price may not be giving it much credit. You probably think of PepsiCo as a company built around North America, but its business abroad is growing faster than the company as a whole. Yet the stock lost 7.0% over the past year, against a 15.3% return for the S&P 500, and the company lowered its earnings forecast in October. That is the contradiction. So how big has PepsiCo’s international business become?

PepsiCo Already Earns 45% Of Profit Internationally

That share covers profit so far in fiscal 2026, as PepsiCo put it on its October 8, 2026 earnings call. The company said it will keep putting money into the international business to maintain its momentum.

The growth abroad is what stands out. International organic revenue rose 8% in fiscal Q3 2026, and its operating margin widened by 105 basis points. Organic revenue for PepsiCo as a whole rose 3.1%, meaning the international segment grew at more than twice the company’s pace. PepsiCo said that momentum has been building for many quarters.

Why Did PepsiCo Cut Earnings Guidance?

PepsiCo cut its guidance because of rising costs. It lowered its full-year earnings forecast on October 8, 2026, even though its quarterly earnings and revenue topped Wall Street’s estimates. On the call, PepsiCo pointed to commodity costs that are ramping up as its hedges roll off. Those hedges typically run 6 to 12 months, and they had shielded the company from some costs until now.

Drinks are the other sore spot. PepsiCo said it is dissatisfied with its soft drinks business. The North America beverages business will lose a tariff-related benefit it had in the third quarter, putting more pressure on that business. Even so, investors now pay just 17.0 times PepsiCo’s earnings over the past twelve months, against 22.9 times for the S&P 500. The price appears to weigh these worries more than the growth abroad.

International is where PepsiCo is stronger than it looks. The international business widened its margin in the same quarter that the company said its overall margins fell short of what it expected. It does not escape the costs, though. PepsiCo described a new wave of inflation, from energy and agricultural prices, that is coming to every country, not only the U.S.

What Could Go Wrong For PepsiCo Internationally?

Rules in a single country can limit how PepsiCo markets its drinks there. India’s food regulator banned the use of the “energy drink” label, and PepsiCo and Monster Beverage have sued the regulator, citing the impact on their business, news reports said on October 1, 2026.

PepsiCo said it will give more detail on its 2027 expectations in February 2027, when it reports the fourth quarter. International organic revenue growth and margin in that report, together with the 2027 outlook, are the figures to watch.

How To Act On PEP?

Not necessarily on PepsiCo alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming, the leaders of their industries, wherever they are. Here are two companies from PepsiCo’s own industry that have beaten it. Over the five years to October 2026, Coca-Cola stock rose 97% and Coca-Cola Consolidated stock rose 456%, while PepsiCo stock fell 1.2%.

Finding companies like these takes comparison across industries and sectors, and that is what the Trefis High Quality (HQ) Portfolio does. It holds 30 quality companies in equal weight and, since its inception in September 2020, has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap and Russell 2000. See how we find the leaders.

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