PepsiCo Shares Surge On Upbeat Quarterly Earnings


Shares of PepsiCo (NASDAQ: PEP) climbed 3% on Wednesday after the food and beverages company posted upbeat first quarter earnings. PepsiCo attributed the positive results to its Frito-Lay business segment and solid growth in its global market. Revenue rose 2.6% while organic revenue grew by 5.2% during the quarter.

PepsiCo cited currency headwinds as the reason for the difference between overall sales growth and organic growth. The company also revealed that it is facing foreign exchange pressure just like its rival Coca-Cola Co (NYSE: KO). The Nasdaq-listed company also affirmed its outlook for the current year. Over the past 12 months, PepsiCo stock has rallied 12.4% while the S&P 500 has climbed 7.4%.

PEP Earnings & Outlook

Net income for the quarter ended March 23 grew to $1.41 billion, or $1.00 per share from $1.34 billion, or $0.94 per share reported a year earlier. Adjusted for one-time costs and gains, earnings came in at $0.97 per share. Analysts surveyed by Refinitiv were expecting adjusted earnings of $0.92 per share.

Net sales increased 2.6% to $12.88 billion beating Wall Street estimate of $12.66 billion. Frito-Lay North America segment posted revenue of $3.815 billion, up 5.5% and above estimates of $3.75 billion.  North America Beverages sales grew 2% to $4.51 billion beating expectations of $4.46 billion while Quaker Foods North America revenue declined 1.2% to $594 million missing expectations of $597 million.

Organic revenue growth in Q1 was 5.2%. PepsiCo reiterated its outlook for fiscal 2019 which includes earnings of $5.50 per share and organic revenue growth of 4%.

PepsiCo CEO Comments

PepsiCo Chairman and CEO Ramon Laguarta said, “We are pleased with our results for the first quarter. While adverse foreign exchange translation negatively impacted our reported net revenue performance, our underlying organic revenue growth accelerated to more than 5% in the quarter. Frito-Lay North America and each of our international divisions delivered particularly strong operating performance, and PepsiCo Beverages North America generated sequential quarterly net revenue acceleration.” 

“We are equally pleased with the progress we are making on our ambitious agenda to invest to build capabilities, strengthen our brands, and add capacity to grow.  With our strong start to the year and good momentum on our key priorities, we remain confident in achieving the 2019 financial targets we communicated earlier this year,” Laguarta added.

PepsiCo Inc Profile

PepsiCo manufactures and distributes nonalcoholic beverages, grain-based foods, and a variety of snacks. Its key brands include Pepsi, Gatorade, Mountain Dew, Tropicana, Quaker, Lay’s, Doritos, and Cheetos.

The firm receives a slight majority of revenue from food, with Frito-Lay North America (around one fourth of sales) contributing above 40% of operating profit. It distributes its products through direct-store-delivery and customer warehouse systems, as well as third-party networks. Pepsi generates 57% of its revenue in the United States.