PepsiCo stock (NYSE:PEP) experienced a 2.5% premarket increase on Thursday as the renowned beverages and snacks company exceeded estimates for the second quarter and raised its guidance for the second consecutive quarter.
PepsiCo is a prominent global company known for its extensive range of beverages and snacks. With a rich history and a strong presence in the market, PepsiCo has established itself as a leading player in the food and beverage industry. The company’s diverse portfolio includes well-known brands like Pepsi, Lay’s, Doritos, Gatorade, Tropicana, and Quaker, among many others.
For the quarter, PepsiCo reported a net income of $2.748 billion, equivalent to $1.99 per share. This marked a significant rise from the previous year’s $1.429 billion, or $1.03 per share. Adjusted earnings per share stood at $2.09, surpassing the $1.96 consensus forecast from FactSet.
The company’s revenue for the quarter reached $22.322 billion, up from $20.225 billion in the same period last year, also outperforming the FactSet consensus of $21.729 billion.
In a statement, Chief Executive Ramon Laguarta expressed the company’s future focus, stating, “Moving forward, we will look to elevate our focus on productivity initiatives to further support investments in innovation, brand building, digitalization, and sustainability to win in the marketplace and fortify our businesses for the long-term.”
Analysts at Cowen showed enthusiasm for the beat and the increased guidance, maintaining their outperform rating on the stock. PepsiCo remains their second-highest pick overall.
In terms of segment performance, revenue at Frito-Lay North America saw a 14% increase, while Quaker Foods North America rose by 1%, and PepsiCo Beverages North America experienced a 10% rise. Latin America revenues rose by 18%, Europe revenue was up by 13%, but Africa, the Middle East, and South Asia revenue decreased by 8%. Revenue for the Asia Pacific, Australia, New Zealand, and China region increased by 1%.
PepsiCo’s well-known brands like Lay’s, Doritos, Cheetos, and Ruffles demonstrated double-digit net revenue growth, along with emerging brands catering to health-conscious consumers, such as PopCorners, SunChips, Bare, and Off The Eaten Path.
Within Frito-Lay, the company expanded its options with lightly salted products and smaller pack sizes to accommodate consumers seeking portion control. Furthermore, PepsiCo diversified its packaging options by introducing Frito-Lay minis, which are bite-sized versions of Doritos, Cheetos, and Sun Chips packaged in easy-to-pour canisters.
Additionally, the company experimented with bolder and spicier flavor combinations for existing brands, extending its Flamin’ Hot flavor variety across Doritos, Cheetos, Funyuns, Fritos, and Chester’s.
Quaker Foods gained market share in categories such as pancake mix, pancake syrup, grits, rice, pasta, and lite snacks. The brand delivered double-digit net revenue growth in the lite snacks, grits, cookies, and pancake syrups and mixes categories.
PepsiCo Beverages continued to expand its range of zero-sugar offerings and update its ready-to-drink teas, sparkling beverages, and enhanced waters. In the sports nutrition sector, the company diversified its offerings to include powders, supplements, gummies, and equipment.
The company now expects a 10% organic revenue growth for fiscal year 2023, up from the previous projection of 8%. Core constant currency earnings per share are anticipated to rise by 12%, compared to the previous guidance of a 9% increase. Core EPS is expected to reach $7.47, up from the previous $7.27, while FactSet analysts forecasted it to be $7.32.
PepsiCo plans to return approximately $7.7 billion to shareholders this year, divided between $6.7 billion in dividends and $1.0 billion in share buybacks.
PepsiCo Stock Performance
As of Wednesday’s close, PepsiCo stock had gained 1.4% this year, while the S&P 500 index recorded a 16% increase.
Featured Image: Unsplash @ NIKHIL
