To The Moon

$Pepsi(PEP)$ is scheduled to report its fiscal Q4 and full-year 2025 earnings on Tuesday, February 3, 2026, before the market opens.

This report is particularly significant as it marks the first full quarter since activist investor Elliott Investment Management revealed a stake in the company (September 2025), and follows a December update where PepsiCo reaffirmed its 2025 guidance while providing an optimistic preliminary outlook for 2026.

Q4 2025 Earnings Consensus Estimates

Consensus EPS: $2.24 (vs. $1.96 in Q4 2024, a projected 14.3% YoY increase).

Consensus Revenue: Approximately $27.7 - $28.1 billion (vying for a return to growth after flat or slightly negative revenue in previous quarters).

Implied 2025 Target: The company expects a 0.5% decline in core EPS for the full year 2025 ($8.12) compared to 2024 ($8.16).

PepsiCo’s fiscal Q3 2025 earnings, reported in October 2025, were characterized by a "beat-and-maintain" narrative. While the company exceeded Wall Street's immediate estimates, the underlying data revealed a consumer base increasingly weary of price hikes.

Q3 2025 Earnings Summary

Core EPS: $2.29, beating the consensus estimate of $2.26.

Net Revenue: $23.94 billion, a 2.6% year-over-year increase, slightly ahead of the $23.86 billion expected.

Organic Revenue Growth: Rose 1.3%, driven by a 4% increase in pricing that was partially offset by a 3% decline in volume.

Segment Performance:

PBNA (Beverages North America): Showed improved momentum with 2% organic growth, led by Pepsi Zero Sugar and Propel.

PFNA (Frito-Lay North America): Remained a soft spot with a 3% decline in organic revenue as consumers cut back on discretionary snacking.

International: Remained the primary growth engine, particularly in EMEA, which saw 9% reported revenue growth.

Lessons Learnt from 2025 Guidance

The most critical takeaway from the Q3 report wasn't the "beat," but the nuanced shift in how PepsiCo plans to navigate a "subdued" consumer environment.

1. The "Price-Hike Era" Has Peaked

For the past two years, PepsiCo successfully offset falling volumes with aggressive price increases. Q3 2025 proved this strategy has reached its limit. Management acknowledged that "affordability" is now a primary concern.

• The Pivot: PepsiCo is shifting away from broad price hikes toward "Price-Pack Architecture"—offering smaller, more affordable entry-level sizes (e.g., $2 "meal deal" snacks) to keep budget-conscious consumers from switching to generic store brands.

2. Volume is the New North Star

Investors have stopped rewarding EPS beats driven solely by cost-cutting or pricing. The market's neutral reaction to the Q3 beat signaled that volume recovery is the only metric that will re-rate the stock. PepsiCo's lesson was clear: it must sacrifice some margin in the short term to "re-recruit" the consumer and drive unit growth.

3. Productivity is Funding the Turnaround

The company reaffirmed its 2025 guidance but emphasized a more aggressive cost-optimization plan. The "lesson" here is that PepsiCo is using internal efficiencies (automation in warehouses, SKU rationalization) to fund the increased marketing and lower price points needed to stimulate demand.

4. International is the Safety Net

While North American snacking (Frito-Lay) is struggling with "snack fatigue" and high prices, the international business remains resilient. This diversification is what allowed PepsiCo to maintain its full-year guidance despite domestic headwinds.

Final Takeaway for Q4

The Q3 report set the stage for the upcoming Q4 results: PepsiCo is in a transition year. They are lapping a period of high inflation and shifting toward a "value-forward" strategy.

Key Metrics to Watch

Investors will be scanning the report for signs of a turnaround in North America and the impact of recent cost-cutting initiatives.

1. Organic Revenue Growth: While PepsiCo expects "low-single-digit" growth for 2025, the focus is on whether volume is recovering. In previous quarters, price hikes drove revenue while volumes slipped; investors now want to see volume-led growth.

2. North America Performance (FLNA & PBNA): Frito-Lay North America (FLNA) and PepsiCo Beverages North America (PBNA) have faced headwinds from shifting consumer preferences and "affordability issues." Look for stabilization in these core segments.

3. Core Operating Margin: PepsiCo has committed to 100 basis points of core operating margin expansion over the next three years. Watch for early evidence of these productivity gains in the Q4 results.

4. 2026 Guidance Update: The company previously projected organic revenue growth of 2–4% and core EPS growth of 7–9% (excluding tax impacts) for 2026. Any upward or downward revision here will likely dictate the stock's post-earnings direction.

PepsiCo (PEP) Price Target

Based on 24 analysts from Tiger Brokers app offering 12 month price targets for PepsiCo in the last 3 months. The average price target is $159.92 with a high forecast of $179.00 and a low forecast of $120.00. The average price target represents a 4.10% change from the last price of $153.63.

Short-Term Trading Opportunities

PepsiCo is historically a lower-volatility "defensive" stock, but earnings events provide specific windows for tactical trades.

• The "Earnings Beat" Play: Historically, PEP has a strong track record of beating EPS estimates (it beat in 3 of the last 4 quarters). Data shows that in the last five years, the stock has risen the day after earnings in 78% of instances, with a median gain of roughly 1.5%.

• Technical Setup: As of late January 2026, the stock has been trading near $148–$153. A decisive break above the $155 resistance level on a positive report could trigger a technical "run" toward the analyst consensus target of $168.

• The "Elliott Effect": Any mention of accelerated share buybacks or more aggressive restructuring (often pushed by activists like Elliott) could lead to a sharper-than-usual upward spike, even if the actual earnings numbers are only "in-line."

Cautionary Note: If the company warns that GLP-1 (weight-loss drugs) or inflation-weary consumers are continuing to hurt snack volumes more than expected, the stock could test its 52-week low near $127.

Summary Table

Technical Analysis - Exponential Moving Average (EMA)

We are seeing PEP making a significant upside after turning into a positive RSI momentum, and PEP has strong track record of beating EPS estimates (it beat in 3 of the last 4 quarters), the last Q3 post earnings, we saw PEP gained more than 3%, so we could be seeing the PEP bulls trying to make a decisive break above the $155 resistance level.

And if there is a positive report, it could trigger a technical "run" toward the analyst consensus target of $168. Another catalyst would be the mention of accelerated share buybacks or more aggressive restructuring (often pushed by activists like Elliott), that could help to push for more upward spike.

Summary

PepsiCo (PEP) is scheduled to release its fiscal Q4 and full-year 2025 results on Tuesday, February 3, 2026, before the market opens. This report serves as a pivotal "gut check" for the company’s new strategic pivot toward affordability and efficiency.

The Numbers to Beat

• Consensus EPS: $2.24 (up ~14% YoY).

• Consensus Revenue: Approximately $28.9 billion.

• Full-Year Context: Analysts expect 2025 core EPS to land at $8.12, a marginal decline from 2024, reflecting the heavy "investment year" management signaled previously.

Three Pillars of the Q4 Analysis

1. The "Affordability" Shift: After years of driving revenue through price hikes, PepsiCo is now prioritizing volume recovery. Investors are looking for evidence that the new "Price-Pack Architecture" (smaller, cheaper entry points) is successfully halting market share losses to private labels in North America.

2. The Elliott Influence: Since Elliott Investment Management took a stake in late 2025, there has been heightened pressure for aggressive cost-cutting. Watch for updates on the 100 basis point margin expansion target and potential increases in share buybacks or dividends (currently yielding ~3.9%).

3. 2026 Guidance Reaffirmation: In December 2025, PepsiCo issued a preliminary 2026 outlook of 2–4% organic revenue growth and 7–9% core EPS growth (excluding tax impacts). Any deviation from these figures will be the primary driver of post-earnings volatility.

Market Sentiment

Wall Street remains cautiously optimistic, with a consensus "Hold/Moderate Buy" rating and an average price target of $159. Trading around $145–$153 leading into the print, the stock is viewed as a "show-me" story. A beat on volumes—rather than just price-driven revenue—would likely trigger a technical breakout toward $160.

Appreciate if you could share your thoughts in the comment section whether you think PEP could produce a result that show that they are navigating the period of high inflation well and the “value-forward” strategy is working?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.