Pepsi(PEP.US)Q4 Operating Profit Surges Nearly 60%, Announces 15% Price Reduction on Lay's Chips and Other Snacks + $10 Billion Stock Buyback

The global leader in food and beverages, PepsiCo (PEP.US), announced that its overall revenue and profit for the fourth quarter both exceeded Wall Street analyst expectations, primarily driven by strong international market demand. More notably, PepsiCo management announced a $10 billion share repurchase plan and reaffirmed a profit growth target announced in December 2025.

Headquartered in New York, PepsiCo owns many popular food and beverage brands worldwide, including Lay’s and Gatorade. The company reported a non-GAAP adjusted earnings per share of $2.26 for the fourth quarter, slightly above the Wall Street consensus estimate of approximately $2.23, and significantly higher than $1.96 in the same period last year.

In terms of total revenue and other key performance indicators, PepsiCo’s revenue for the three months ending December 27 was approximately $29.34 billion, a year-over-year increase of 5.6%, surpassing the analyst consensus of about $28.97 billion. The GAAP operating profit for the fourth quarter was approximately $3.557 billion, up nearly 60% year-over-year, and GAAP net income was about $2.54 billion, an increase of approximately 67% year-over-year.

PepsiCo has been under significant pressure from activist investor Elliott Management Investment. The firm held about $4 billion worth of shares in the company last year and urged PepsiCo management to reform its product portfolio and make key brands more affordable. In December, the company reached an agreement with the investor, committing to reduce its U.S. product portfolio by 20% and to lower prices on some key brands to implement these measures.

As of Monday’s close, PepsiCo’s stock price has risen 8.1% this year, outperforming the S&P 500 index by about 1.9%. However, the stock declined 5% amid the ongoing bull market in U.S. stocks through 2025, and significantly underperformed its biggest competitor—Coca-Cola.

Demand in countries like India and Brazil for more locally flavored snacks and sodas has driven sales growth. Meanwhile, the company is undertaking a comprehensive adjustment of its product lineup in the U.S. to meet consumers’ changing tastes.

Media reports on Tuesday quoted company executives saying that due to widespread consumer complaints about high prices, PepsiCo plans to cut prices on products like Lay’s chips and Cheetos by up to 15%, including Lay’s chips, Doritos, Cheetos, Lay’s chips, and Doritos tortilla chips, while maintaining product sizes.

PepsiCo and other major consumer-facing companies in the food, beverage, and household goods sectors, such as Procter & Gamble and Coca-Cola, have shifted their focus toward lower-priced entry-level products and smaller packaging options, as more middle- and lower-income consumers in the U.S. seek to stretch their budgets amid persistent inflation and challenges like last year’s U.S. government shutdown delaying SNAP benefits.

PepsiCo CEO Ramon Laguarta stated in a Tuesday release that the company aims to promote growth by “offering more competitive snack and beverage products to respond to changes in consumer purchasing power.”

To meet the strong demand for cleaner and healthier ingredients, the company has invested in brand restructuring for key products like Lay’s and Doritos, benefiting from the widespread use of weight-loss medications globally and the Trump administration’s “Let’s Make America Healthy Again” campaign.

Regarding the market’s performance outlook, management reaffirmed the company’s December-issued annual core EPS growth target of 4% to 6%, and reiterated that full-year organic revenue is expected to grow by 2% to 4%.