PepsiCo (PEP) Shares Higher After Better than Expected Earnings

Shares of PepsiCo Inc. (PEP) were trading up +2.19 or +2.29 percent to $97.80 per share in Thursday's premarket after the company announced better than expected second quarter earnings early this morning. PepsiCo stock closed at $95.61, down -0.79 or -0.82 percent in Wednesday's regular trading session.

Purchase, New York based PepsiCo Inc. was originally founded as the Pepsi-Cola company in 1898.
The company then merged with Frito-Lay, Inc. in 1965 to become PepsiCo Inc. Since then the company has acquired a number of other food and beverage brands with its acquisition of Tropicana in 1998 and Quaker Oats in 2001. The multinational enterprise is one of the world's largest companies of its type with operations in North and South America, Europe, Asia, the Middle East and Africa and employs more than 274,000 people globally.

After excluding some commodity hedge positions, which were marked to market along with restructuring charges, PepsiCo reported earnings for its second quarter were $1.32 per share. Revenue was $15.92 billion, down -5.7 percent in large part due to the impact of adverse foreign currency translation, which shaved about 10 percentage points from the company's growth.

The analyst consensus was for the company to report earnings of $1.24 per share on revenue of $15.8 billion. On a GAAP basis, the company's earnings came to $1.98 billion or $1.33 per share versus $1.29 for the same period one year ago.

PepsiCo Chairman and Chief Executive Officer, Indra Nooyi noted in the company's press release that, "PepsiCo achieved strong financial performance in the second quarter. We delivered mid-single digit organic revenue growth, strong gross margin expansion and double-digit core constant currency EPS growth. Based on our year-to-date results and positive momentum in the businesses, we are increasing our full-year core constant currency EPS growth target to 8 percent.

"Our results also reflect our keen focus on innovation, brand building and marketplace execution. Through scientific R&D and strategic insights, we are developing sustainable innovation to offer consumers the range of food and beverage choices they're looking for and creating a powerful platform for growth.

Gross margins continued expanding in the second quarter, from 54 percent to 55 percent, while input costs declined -7.9 percent. For the company's third quarter guidance, the earnings per share growth target was raised from 7 percent to 8 percent, with foreign translation expected to impact core earnings by 11 percentage points. In addition, the company expects to deliver approximately $1 billon in productivity savings and return between $8.5 billion to $9 billion in cash to stockholders.

PepsiCo stock is reacting favorably to the earnings report in this morning's premarket, nevertheless, the market's recent selloff could affect this morning's price action and shares have already started to decline. The company is still a solid play in the food and beverage sector and the stock is currently a few points from its yearly high.

Other News About PEP

PepsiCo Gives CFO Hugh Johnston Additional Role of Vice Chairman

CFO will be put in charge of global business and IT solutions.

PepsiCo Charts Say Stock Could Break Out of Range Post-Earnings

Analyst says the stock is technically due for a breakout on the upside.

Other Stocks in the News

Mobileye's stock surges after analyst turns bullish

Stock was up four percent in this morning's premarket.

P&G to sell beauty business to Coty in $12.5 billion deal

Coty will be buying the Clairol and Wella brands in the transaction.

Published on Jul 9, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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