What Is The Best Case For PepsiCo Stock?
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The best case for PepsiCo (PEP) stock may not come from the sodas and chips Americans know best. The shares returned 3.7% over the past year, against 14.9% for the S&P 500, and PepsiCo lowered its full-year earnings forecast when it reported on October 8, 2026. On the earnings call that day, however, management named one part of the company as a big driver of faster sales growth. So which business is it, and how much has it delivered so far?
Image from PixabayPepsiCo’s Growth Is Coming From Outside North America
That business is PepsiCo’s international arm. Management said international organic revenue rose 8% in fiscal Q3 2026, while organic revenue for the whole company grew 3.1%. Management called it a stellar quarter for international, adding that momentum there has been building for many quarters.
The international segment is already a large part of the company, not a side bet. Management said it has earned 45% of PepsiCo’s profit so far in fiscal 2026. Management also said it will keep fueling and building the international business, even as it works to make North America grow faster.
Management ties this to a company-wide goal. It called crossing 3% organic growth an important milestone on the way to its long-term target of 4%. International, management said, was a big driver of getting past that mark.
How Big Is PepsiCo’s Business Outside North America?
The largest piece is the Europe, Middle East and Africa segment. It brought in $18.0 billion in fiscal 2025, or 19.2% of PepsiCo’s revenue. Sales there grew 8.2% that year, up from 2.8% in fiscal 2024. The two segments in North America barely moved: PepsiCo Beverages North America grew 1.5% in fiscal 2025, and PepsiCo Foods North America grew 0.4%. Together they made up 59% of fiscal 2025 revenue, and PepsiCo’s four other segments, all outside North America, made up the rest.
Not every region kept pace. Latin America Foods, 11.2% of revenue, shrank 0.2% in fiscal 2025. The strongest growth came from Europe, the Middle East and Africa.
As for the stock, by one common measure the shares cost less than the market. The stock trades at 17.8 times earnings, against 22.8 for the S&P 500. The shares returned 13.3% from October 6 to November 4, while the S&P 500 lost 1.6%. Even after that rise, the latest close sat 13.9% below the stock’s highest close of the past year, set on February 6, 2026.
What Could Slow PepsiCo’s Growth Abroad?
Rising costs are the main concern. On the October 8 call, management said margins were below where it had expected because input costs are trending higher and the product mix has been a headwind. The hedges that shielded PepsiCo from some of those costs typically run six to 12 months, and management said they are now rolling off.
Management said a new wave of inflation is coming to every country, including the U.S., given energy and agricultural prices. That puts higher costs in the same markets where PepsiCo’s sales are growing fastest.
Management has not yet given a full view of 2027, saying it will provide more detail on its 2027 expectations when it reports the fourth quarter. International organic revenue growth is the measure to watch when PepsiCo reports that quarter, expected in February 2027.
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