Shares of PepsiCo Inc. (NASDAQ: PEP) advanced 3.33% in premarket trading Thursday, after the beverage and snack giant reported organic revenue growth of 4.3% for its fiscal third quarter 2019.
The company also beat profit and revenue expectations, thanks to higher advertising spending and improved demand for its low-calorie beverages in North America. PepsiCo recorded revenue growth across all its segments during the quarter.
Shares of the company have rallied 21% so far this year and 23% in the past 12 months.
PEP Earnings & Outlook
PepsiCo had net income of $2.1 billion, or $1.49 per share in the quarter, down from $2.5 billion, or $1.75 per share in the same period last year.
Excluding items such as restructuring charges and the impact of foreign exchange, the company earned $1.56 per share in the quarter. On average, analysts polled by Refinitiv were expecting adjusted earnings of $1.50 per share.
Companywide revenue stood at $17.19 billion, up 4.3% from a year earlier. Analysts had forecast revenue of $16.93 billion in the quarter. Organic revenue growth, a closely watched metric, came in at 4.3% during the quarter. Analysts had called for organic revenue growth of 3.4%.
Revenue from the company’s North American beverage unit grew 3.5% to $5.64 billion. This segment was aided by organic and low-calorie versions of the Gatorade sports drink. PepsiCo’s Europe Sub-Saharan Africa segment saw grow 6% in the quarter to $3.3 billion.
For the full year, the company said it expects to meet or exceed its organic revenue growth target of 4%. However, its full-year guidance for core earnings of $5.50 per share hasn’t changed. Analysts expect PepsiCo to report full-year core earnings of $5.52 per share.
PepsiCo CEO Comments
“We are pleased with our results for the third quarter,” said Chairman and CEO Ramon Laguarta. “While adverse foreign exchange translation negatively impacted reported net revenue performance, organic revenue growth was 4.3% in the quarter.”
Laguarta continued, “We are making good progress against our strategic priorities and our businesses are performing well as we continue to make the necessary investments in our capabilities, brands, manufacturing and go-to-market capacity to propel our future growth. Given our performance year-to-date, we now expect to meet or exceed our full-year organic revenue growth target of 4%.”
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. – Warrior Trading News
