Evercore Warns PepsiCo Q2 EPS May Fall Below Consensus, Citing Consumer Slowdown and Cost Pressures
Miles Bennett
Evercore ISI analyst Robert Ottenstein warns PepsiCo's Q2 earnings per share may trail consensus by $0.02, as rising oil prices and bad weather cool consumer spending — a rare miss risk for a company that has beaten estimates in 15 of the past 16 quarters.
How far below consensus is Evercore's forecast?
Evercore projects Q2 organic sales growth at +2.3%, versus the +2.8% consensus. For a mature consumer-staples company, a 0.5-percentage-point gap is a meaningful divergence.
Q2 EPS is forecast at $2.18, below the $2.20 consensus. This means → Evercore sees the Street as slightly too optimistic on PepsiCo's near-term profitability.
The team also expects Q2 operating margins to come under pressure from cost inflation — profit is being squeezed from both the revenue side and the cost side.
Why is consumer spending slowing?
Ottenstein's logic chain: oil prices rising from mid-April + heightened macro uncertainty + bad weather — three factors stacking up to dampen consumer willingness to spend.
In plain terms = when fuel costs more, people spend less on impulse purchases like snacks and drinks; bad weather keeps them home; economic uncertainty makes them cautious — all of which hit PepsiCo's "grab-and-go" product mix directly.
The FIFA World Cup is being held in North America, but the sales boost falls in Q3, not Q2 — this quarter gets none of that tailwind.
What cost pressures loom ahead?
Aluminum and fuel prices are rising, creating potential cost headwinds. PepsiCo uses a direct-store-delivery (DSD) model — its own truck fleet delivers products to retailers — so fuel costs flow straight into distribution expenses.
Evercore notes that PepsiCo carries 9-to-12-month hedging contracts. This means → the cost impact will not hit this quarter's margins immediately — it will show up more in fiscal 2027.
In plain terms = PepsiCo locked in raw-material and fuel prices ahead of time, buying a short-term buffer — but once those hedges roll off, the cost pressure arrives in full.
What happens if PepsiCo actually misses?
PepsiCo has beaten EPS estimates in 15 of the past 16 quarters — outperformance has become almost routine. This reflects a high level of market trust in PepsiCo's earnings consistency.
A rare miss could trigger an outsized market reaction — precisely because investors are accustomed to beats, a surprise shortfall would be read as a break in pattern.
PepsiCo reports Q2 earnings before the U.S. market opens on July 9; the data will settle the question then.
Content is for reference only, not financial advice.