When PepsiCo Inc. (PEP) reports its first-quarter earnings on Thursday, the headline numbers probably won't surprise anyone. Wall Street expects results largely in line with estimates. The real story, however, is what happens around the edges of the earnings report—specifically, in the Middle East and in your snack cupboard.

Bank of America analyst Peter Galbo, who has a Neutral rating and a $173 price target on the stock, thinks investors will be listening closely for two things. First, there's the geopolitical situation. PepsiCo isn't a newcomer to the United Arab Emirates; it's been operating there since 1962, distributing everything from Pepsi and Lay's to Aquafina and Quaker through local partners. The company works with the Dubai Refreshment Company and Abu Dhabi Refreshment Company, supported by a network of warehouses and manufacturing facilities.

That's a significant footprint, and it's in a region that's seen recent tension. Iranian strikes on the UAE were reported just last Tuesday, and the U.S. Embassy in Riyadh was hit by drones, highlighting the strained diplomatic landscape. For a global consumer staples giant, operational disruptions or supply chain hiccups in a key market are a real business risk, not just a headline.

The second big focus is closer to home: the turnaround at PepsiCo Foods North America (PFNA), the company's snacks division. According to Galbo, NielsenIQ data shows PFNA "improved sequentially for a second consecutive quarter." Sales growth accelerated from a 0.6% decline in Q4 2024 to a 0.4% increase in Q1 2026. That's a small number, but the direction matters. It suggests the business is stabilizing and aligns with the analyst's own forecast for +0.5% organic sales growth.

Galbo reiterated his earnings estimates for Q1 and full-year 2026 at $1.53 per share and $8.60 per share, respectively. The company's last report, for Q4 2025, set a solid precedent: revenue of $29.34 billion beat the $28.98 billion consensus, and earnings of $2.26 per share topped the expected $2.24. Organic revenue grew 2.1%, driven by higher pricing, though volumes were a mixed bag—beverage unit volume grew 1% while snacks volume fell 2%.

So, the upcoming call is a bit of a split screen. On one side, you have the steady, predictable business of selling soda and chips, where a snacks turnaround is slowly taking shape. On the other, you have the unpredictable world of geopolitics, where PepsiCo's decades-old operations face real-world risks. Investors will be listening to see which narrative dominates the conversation.

Shares of PepsiCo were down 1.56% to $154.29 at the time of publication on Tuesday.