AI Takeaway
PepsiCo delivered a strong Q1 2026 with revenue up 8.5% YoY to $19.4B and net income surging 26.9% to $2.3B, driven by operating leverage as SG&A growth was held to just 1.5% while operating income jumped 24.4%.
Revenue
$19.44B
++8.50% YoY
EPS (Basic)
$1.70
++26.87% YoY
Gross Margin
55.2%
-0.58% YoY
Operating Income
$3.21B
++24.39% YoY
Filed · Source: SEC EDGAR 10-Q filing
PepsiCo grew total revenue 8.5% YoY to $19.44B in Q1 2026 (vs. $17.92B in Q1 2025), reflecting broad-based demand across its beverage and snack segments. This growth rate is notable given the challenging consumer spending environment.
Source: Source: 10-Q Income Statement, Q1 2026
Operating income rose 24.4% YoY to $3.21B while SG&A expenses grew only 1.5% to $7.52B, expanding the operating margin by approximately 210 basis points to 16.5%. This demonstrates effective cost discipline relative to top-line growth.
Source: Source: 10-Q Income Statement, Q1 2026
Net income increased 26.9% YoY to $2.33B, with diluted EPS rising 27.8% to $1.70 from $1.33 in Q1 2025. The earnings growth significantly outpaced revenue growth, indicating meaningful margin expansion.
Source: Source: 10-Q Income Statement, Q1 2026
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Upgrade to unlockPepsiCo's debt-to-equity ratio stands at 4.17x, indicating a heavily leveraged balance sheet with total liabilities of $89.1B against stockholders' equity of $21.4B. In a rising or sustained high interest rate environment, this level of leverage could pressure interest expenses and limit financial flexibility. Refinancing risk remains a key concern for a company of this capital structure.
Source: Source: 10-Q Balance Sheet, Q1 2026
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Upgrade to unlockReported EPS of $1.61 versus the $1.57 analyst consensus — a +2.8% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $19.44B | $17.92B | +8.50% |
Cost of Revenue | $8.71B | $7.93B | +9.92% |
Gross Profit | $10.73B | $9.99B | +7.39% |
Operating Income | $3.21B | $2.58B | +24.39% |
Net Income | $2.33B | $1.83B | +26.88% |
EPS (Basic) | $1.70 | $1.34 | +26.87% |
EPS (Diluted) | $1.70 | $1.33 | +27.82% |
SG&A Expense | $7.52B | $7.41B | +1.46% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $110.65B | $101.74B | +8.76% |
Current Assets | $30.92B | $26.29B | +17.60% |
Total Liabilities | $89.11B | $83.21B | +7.09% |
Current Liabilities | $34.48B | $31.51B | +9.41% |
Stockholders' Equity | $21.38B | $18.39B | +16.28% |
Cash & Equivalents | $10.47B | $8.27B | +26.69% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $41M | $-973M | +104.21% |
Investing Cash Flow | $-477M | $-1.23B | +61.28% |
Financing Cash Flow | $1.66B | $1.77B | -6.00% |
Dividends Paid | $1.97B | $1.88B | +4.46% |
Share Buybacks | $182M | $183M | -0.55% |
D&A | $742M | $684M | +8.48% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 55.2% | 55.8% | -0.58% |
Operating Margin | 16.5% | 14.4% | +2.11% |
Net Margin | 12.0% | — | — |
ROE | 10.9% | — | — |
ROA | 2.1% | — | — |
Current Ratio | $0.897 | — | — |
Debt to Equity | $4.167 | — | — |
Other companies in Soft Drinks & Non-alcoholic Beverages
PepsiCo reported strong Q1 2026 results with revenue of $19.44B (up 8.5% YoY) and net income of $2.33B (up 26.9% YoY). Diluted EPS came in at $1.70, up 27.8% from $1.33 in Q1 2025, driven by significant operating leverage as cost growth was well-controlled.
The headline takeaway is that PepsiCo's earnings grew nearly three times faster than revenue, with operating margin expanding ~210 basis points to 16.5% due to SG&A discipline. However, operating cash flow was only $41M despite $2.3B in net income, and the company paid $1.97B in dividends — a notable gap between reported earnings and actual cash generation.
Operating and net margins improved significantly — operating margin rose to 16.5% from 14.4% a year ago — but gross margin slipped slightly to 55.19% from 55.77% as cost of revenue grew faster than sales. The net margin for Q1 2026 was approximately 11.97%.
Based on the financial data, key risks include a high debt-to-equity ratio of 4.17x, a current ratio below 1.0 (0.897) indicating negative working capital, and a very thin operating cash flow of $41M versus $2.33B in net income. Additionally, PepsiCo paid $1.97B in dividends while generating minimal operating cash, raising questions about dividend sustainability without additional borrowing.
PepsiCo paid $1.97B in dividends in Q1 2026 but generated only $41M in operating cash flow, meaning dividends were largely funded through financing activities rather than operations. While PepsiCo's strong brand and historical cash generation support the dividend long-term, the Q1 cash flow gap is a near-term concern that investors should monitor in subsequent quarters.