PepsiCo Braces for Earnings as Demand Pressures Mount

PepsiCo faces pressure before Thursday's quarterly report as weight-loss drugs and inflation weaken demand. The company has struggled to meet margin targets set after Elliott's investment, with North America volumes hurt by higher input costs and inflation. Analysts expect Q3 revenue of $24.96 billion, up 4.3%, and adjusted EPS of about $2.29, up 0.21%.

PepsiCo reports Thursday amid falling demand tied to weight-loss drugs and inflation. After Elliott's roughly $4 billion stake last year, the company aimed to raise core operating margin by 100 basis points over three years, but it slipped 15 basis points in the first half to 16.3%. North American volumes remain weak; February cuts of up to 15% on Lay's and Doritos haven't reversed flat sales or share losses, according to TD Cowen's Robert Moskow.

New products including Doritos Protein, SunChips Fiber and Good Warrior beef sticks target health-conscious consumers, while some chip and soda prices rose last month. Analysts expect Q3 revenue of $24.96 billion, up 4.3%, and adjusted EPS near $2.29, up 0.21%. The stock is down about 13% this year and 16% since Elliott invested; its EV is 10 times EBITDA versus 18 times in mid-2022.

Count words? First para: PepsiCo(1) reports2 Thursday3 amid4 falling5 demand6 tied7 to8 weight-loss9 drugs10 and11 inflation12. After13 Elliott's14 roughly15 $4? billion16 stake17 last18 year19, the20 company21 aimed22 to23 raise24 core25 operating26 margin27 by28 10029 basis30 points31 over32 three33 years34, but35 it36 slipped37 15? basis38 points39 in40 the41 first42 half43 to44 16.3%45. North46 American47 volumes48 remain49 weak50; February51 cuts52 of53 up54 to55 15%56 on57 Lay's58 and59 Doritos60 haven't61 reversed62 flat63 sales64 or65 share66 losses67, according68 to69 TD70 Cowen's71 Robert72 Moskow73. That's 73. Second: New1 products2 includi