Pepsico (PEP) Stock | “Pops and Fizzles”

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Pepsico, Inc. (NYSE: PEP)

 

PEP Earnings Results and CEO Comments

Pepsi, the American based multinational conglomerate of beverages, snacks and food businesses posted earnings Thursday July 9,2015 that beat analyst expectations for the second quarter of 2015. While we all know that Pepsi itself is a popular carbonated beverage, some other common names that Pepsico owns and labels are Frito-Lay, Mountain Dew, Gatorade and Tostitos to name a few. As usual, after earnings get announced, the CEO and other Board members hold a conference call to shine light on the company’s results and performance as well as give forward looking insights to future earnings. CEO Indra Nooyi had this to say,  “The company is using creative revenue management tactics, coupled with innovation  to boost its financial performance. That could mean newer products that are positioned as more premium products and cost more, such as its Mountain Dew Dewshine that comes in a glass bottle. This creative bottling effect I have personally witnessed with some family members and friends buying bottles in mini cans filling their refrigerators. These sell for far more than the larger cans on a per ounce basis. The size they say is what attracts them. In addition they like that it is less calories per can and smaller occupancy in their refrigerators.

 

The Numbers and Trading Activity

Net revenue for the three months to June 13,2015 was $15.9bn, a 6 per cent drop from the same period last year but ahead of the $15.8bn the market had forecast.

Net income for the quarter was $1.9bn, or $1.33 a share, easily beating expectations of $1.24 a share. Hugh Johnson, the CFO, had this to say, “Productivity is driving growth and growth is driving productivity, it’s a careful balance and is really working well.”

 

Now while all the earnings numbers and forecasts impressed analysts and shareholders, the stock actually closed down on the day today in heavy trading ( 9.9 million versus average daily volume of 4.4 million) on the New York Stock Exchange at $94.59, after initially trading much higher at $97.20 when trading opened, or up $1.51 from Wednesday’s close . Just what made Pepsi pop at the open and then fizzle at the close is yet to be determined but could be related to the overall market conditions which have turned in recent trading weeks to a negative sentiment. With Greece in turmoil and China’s stock market experiencing a massive bubble and collapse, it is suspected that this at least has some influence in today’s trading as well as macro economic factors that can greatly influence a huge company such as PeisiCo.

 

Chart

Please see below the 6 month daily chart showing a bearish outside engulfing bar day and today’s 5 minute intraday chart showing early strength and subsequent selloff.

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Daily bearish outside engulfing bar day in red

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About Pepsico

PepsiCo, Inc. (PepsiCo), incorporated on November 13, 1986, is a global food and beverage company. The Company operates through six segments: Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), Latin America Foods (LAF), which includes its food and snack businesses in Latin America ; PepsiCo Americas Beverages (PAB), which includes its North American and Latin American beverage businesses; PepsiCo Europe (Europe), which includes beverage, food and snack businesses in Europe and South Africa, and PepsiCo Asia, Middle East and Africa (AMEA), which includes beverage, food and snack businesses in AMEA, excluding South Africa.

The Company’s brands include Agusha, Amp Energy, Aquafina, Aquafina Flavorsplash, Aunt Jemima, Cap’n Crunch, Cheetos, Chester’s, Chipsy, Chudo, Cracker Jack, Crunchy, Diet Mountain Dew, Diet Mug, Diet Pepsi, Diet 7UP, Diet Sierra Mist, Domik v Derevne, Doritos, Duyvis, Elma Chips, Emperador, Frito-Lay, Fritos, Fruktovy Sad, Frustyle, G Series, G2, Gatorade, Grandma’s, Imunele, Izze, Kurkure, Lay’s, Life, Lubimy, Manzanita Sol, Marias Gamesa, Matutano, Mirinda, Miss Vickie’s, Mother’s, Mountain Dew, Mountain Dew Code Red, Mountain Dew Kickstart, Mug, Munchies, Naked, Near East, O.N.E., Paso de los Toros, Pasta Roni, Pepsi, Pepsi Max, Pepsi Next, Propel, Quaker, Quaker Chewy, Rice-A-Roni, Rold Gold, Rosquinhas Mabel, Ruffles, Sabritas, Sakata, Saladitas, Sandora, Santitas, 7UP (outside the United States) and 7UP Free (outside the United States), Sierra Mist, Simba, Smartfood, Smith’s, Snack a Jacks, SoBe, SoBe Lifewater, SoBe V Water, Sonric’s, Stacy’s, Sting, SunChips, Tonus, Tostitos, Trop 50, Tropicana, Tropicana Farmstand, Tropicana Pure Premium, Tropicana Twister, Vesely Molochnik, Walkers, Dr Pepper, Crush, Schweppes and Ya. Through its operations, bottlers, contract manufacturers and other third-parties, the Company manufactures, markets, distributes and sells a variety of beverages, foods and snacks, serving customers and consumers in more than 200 countries and territories. Reuters

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