PepsiCo Q2 earnings expected to reflect weakness in North American snack business, delayed recovery

PepsiCo Inc (NASDAQ:PEP, XETRA:PEP) net outlook was trimmed by Bank of America analysts up of the company's 2nd 4th results, with softer-than-expected show successful its North American snacks concern offsetting steadier planetary trends.

The analysts lowered their fiscal 2026 net per stock (EPS) estimation to $8.61 from $8.65 and somewhat reduced their 2nd 4th forecast to $2.18 from $2.19. The revision reflects weaker show astatine PepsiCo Foods North America (PFNA) and expectations that its betterment volition instrumentality longer to materialize successful the 2nd fractional of the year.

For the quarter, Bank of America present expects consolidated integrated income maturation of 2.9%, down from a anterior estimation of 3.1%. The full-year integrated income maturation outlook was besides chopped to 3.0% from 3.4%.

Despite the downward revisions, the analysts noted continued spot successful planetary markets, which are present expected to present 5.4% integrated income maturation successful the 2nd quarter, up from a anterior forecast of 4.9%. They suggested PepsiCo could inactive reiterate its full-year guidance erstwhile it reports results connected July 9, though the underlying premix of show whitethorn beryllium little favorable.

The superior unit constituent remains PFNA, wherever scanner information indicated a sequential deterioration successful trends during the quarter. NielsenIQ information showed retail income maturation slowing to a 1.0% diminution successful the 2nd 4th from 0.6% maturation successful the first. Bank of America attributed the weakness to macroeconomic pressures, inflation, and unfavorable upwind conditions astir Memorial Day.

As a result, the analysts present expect level integrated income maturation for PFNA successful the 2nd quarter, compared with a erstwhile estimation of 1.5%, and person reduced their full-year forecast to 0.2% from 1.4%. They besides pointed to softer sequential show crossed large brands including Lay's, Doritos, Tostitos, Cheetos, and Ruffles.

In contrast, PepsiCo's beverages part showed humble improvement. Retail income successful North America roseate 0.3% twelvemonth implicit twelvemonth successful the 2nd quarter, portion volumes fell 3.5%, an betterment from the anterior quarter. However, analysts noted ongoing challenges for halfway brands, with Pepsi continuing to suffer marketplace stock and Mountain Dew underperforming its category.

Bank of America besides lowered its terms nonsubjective connected PepsiCo to $164 from $173, based connected 18 times estimated 2027 earnings, down from a anterior aggregate of 19 times. Shares traded hands astatine astir $142 connected Friday afternoon.

The steadfast maintained its 'Neutral' standing connected the stock.