PepsiCo is running out of time to deliver the growth and margin improvements promised after activist investor Elliott Investment Management took a roughly $4 billion stake in the company a year ago. The company’s North American business remains under pressure, with weaker volumes, persistent inflation and higher input costs weighing on consumer demand. PepsiCo’s core operating margin fell to 16.3% in the first half of 2026, down 15 basis points from a year earlier, moving away from its target of a 100-basis-point improvement over three years.
The growing popularity of GLP-1 weight-loss drugs is adding to the challenge by encouraging consumers to reduce their intake of sugary drinks and salty snacks. PepsiCo has responded with healthier products such as Doritos Protein, SunChips Fiber and Good Warrior beef sticks, while rivals including Kraft Heinz and Conagra Brands are also reformulating products. Meanwhile, PepsiCo’s enterprise value has fallen to about 10 times EBITDA from 18 times in mid-2022, while shares have declined nearly 12% this year and around 16% since Elliott’s investment.
Investors will closely watch PepsiCo’s North American performance when it reports third-quarter results on Thursday. Analysts expect revenue to rise 4.3% to $24.96 billion, with adjusted earnings per share increasing slightly to about $2.29. However, Frito-Lay’s U.S. business continues to struggle despite price cuts, new products, expanded distribution and increased marketing. Analysts say investors are looking for evidence that snack volumes and margins have stabilized, alongside stronger beverage pricing power compared with rival Coca-Cola.
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