PepsiCo stock jumps after beating earnings and revenue, outlook lifted

Shares of PepsiCo Inc. rallied on Wednesday after the beverage and snacks giant reported third-quarter earnings and revenue that beat expectations and raised its full-year outlook as higher prices helped compensate for some low volumes.

Net income for the quarter to Sept. 3 increased to $2.70 billion, or $1.95 per share, from $2.22 billion, or $1.60 per share in the same period a year ago. year.

Excluding one-time items, basic earnings per share of $1.97 beat the FactSet EPS consensus of $1.84.

Revenue rose 8.8% to $21.97 billion, well above the FactSet consensus of $20.84 billion. Unfavorable currency translation reduced revenue growth by 3 percentage points.

This marked the 15th consecutive quarter in which PepsiCo beat earnings expectations and the 20th consecutive quarter revenue projections were exceeded, according to FactSet data.

The stock exchange PEP,
+0.48%
climbed 2.6% in premarket trading.

Among the largest segments, PepsiCo Beverages North American revenue rose 3.6% to $6.64 billion, Frito-Lay North America jumped 19.6% to $5.56 billion, l Europe increased 0.9% to $3.65 billion and Latin America increased 19.9% ​​to $2.52 billion. Quaker Oats North America revenue increased 15.4% to $713 million.

Volume decreased by 1.5% in convenience foods and increased slightly by 3.0% in beverages. On an organic basis, which excludes the impact of acquisitions, divestitures and other structural changes, overall volume fell 1% while effective net prices increased 17%.

Cost of sales rose more than revenue growth, up 9.7% to $210.31 billion, while gross margin contracted to 53.1% from 53.5%.

Inventories rose 15.5% to $5.02 billion, after rising 21.6% in the second quarter and 9.5% in the first quarter.

Looking ahead, the company raised its full-year core EPS forecast to $6.73 from around $6.63. The FactSet 2022 EPS consensus was $6.69.

The company confirmed its intention to return $7.7 billion to shareholders this year, including $6.2 billion through the payment of dividends and $1.5 billion through share buybacks.

PepsiCo stock fell 6.4% year-to-date through Tuesday, while exchange-traded fund SPDR Consumer Staples Select Sector XLP,
+0.82%
fell 12.7% and the S&P 500 SPX index,
-0.65%
fell 24.7%.

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