PepsiCo (PEP) Beats on Earnings, Raises Guidance
Shares of PepsiCo Inc. (PEP) were trading up +3.27 or +3.05 percent to $110.65 per share in Thursday’s premarket after the company announced better than expected third quarter earnings early this morning. PepsiCo stock closed at $107.38, down -0.11 or -0.10 percent in Wednesday’s regular trading session.
Purchase, New York based PepsiCo Inc. was originally founded as the Pepsi-Cola company in 1898.
After excluding stock option expenses, PepsiCo reported better than expected core earnings for its third quarter of $1.40 per share versus the market’s $1.32 per share consensus.
Based on this solid performance, the company’s leadership boosted its core guidance for 2016’s earnings per share to $4.78 from its previous suggested EPS result of $4.71. This is the fourth straight quarter that PepsiCo has reported a favorable earnings surprise. In addition, the company says it anticipates roughly $3 billion in capital expenditures.
PepsiCo Chairman and Chief Executive Officer, Indra Nooyi noted in the company’s press release that, “We are pleased with our results for the third quarter and year to date. We are executing our strategy well and managing what is in our control. Our product portfolio, geographic mix and capability centers are enabling us to deliver balanced revenue and productivity”, and that, “Based on our year-to-date performance and our outlook for the fourth quarter, we are raising our full-year core constant currency EPS growth objective.”
Core gross margins continued expanding in the third quarter, rising 50 basis points, while core operating margin increased by 30 basis points, largely on the back of improvements in productivity and a reduction in the cost of raw materials. In addition, the company’s core tax rate declined to 23.3 percent for the third quarter, down from the 24.6 percent reported for the same quarter last year.
PepsiCo’s stock reacted favorably to its third quarter earnings report in this morning’s premarket by rising $3.27 or 3.05 percent in early trading to $110.65. The company remains a solid bet in the food and beverage sector as the stock again approaches its yearly high of 110.94.
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