PepsiCo outlines 2026 financial targets after Elliott engagement

PepsiCo Inc. (NASDAQ: PEP) announced commercial and financial priorities aimed at enhancing shareholder value, including preliminary 2026 financial targets, following engagement with investor Elliott Investment Management.

The company expects organic revenue growth of 2 to 4 percent in 2026, with core earnings per share growing approximately 5 to 7 percent. PepsiCo anticipates delivering at least 100 basis points of core operating margin expansion over the next three fiscal years.

The initiatives focus primarily on PepsiCo Foods North America, including implementing targeted affordable pricing, expanding innovation with products like Simply NKD Cheetos and Doritos, and reducing operating costs. The company closed three manufacturing plants and shut several production lines this year while reducing nearly 20 percent of SKUs in the U.S. by early next year.

"Today, we are announcing our plans and initiatives that aim to accelerate organic revenue growth, deliver record productivity savings and improve core operating margin – starting in 2026," said Ramon Laguarta, Chairman and CEO of PepsiCo.

Elliott Investment Management expressed support for the plan. "We believe the plan announced today to invest in affordability, accelerate innovation and aggressively reduce costs will drive greater revenue and profit growth," said Marc Steinberg, Partner at Elliott.

PepsiCo expects free cash flow conversion of at least 80 percent in 2026 and at least 90 percent in 2027. Capital spending is expected to remain below 5 percent of net revenue in 2026. The company plans to increase annual cash returns to shareholders in 2026 and 2027, subject to board approval.

The company affirmed its 2025 financial outlook, expecting low-single-digit organic revenue growth and core constant currency EPS approximately even with the prior year.

PepsiCo intends to provide a comprehensive update on North America supply chain and go-to-market optimization initiatives in late 2026.

You May Also Be Interested In

• USA Rare Earth completes merger with Serra Verde Group
• lululemon athletica (LULU) Tops Q2 EPS by $1.10, Cuts Guidance
• Ambarella (AMBA) Tops Q2 EPS by 1c; offers guidance