PepsiCo
just delivered another beat-and-raise quarter, setting out guidance for strong growth through year’s end year as the beverage and snack maker keeps besting its consumer staples peers.
On Thursday, Pepsi (ticker: PEP) reported second-quarter earnings per share of $1.99 on revenue of $22.3 billion, beating the expectations of analysts surveyed by FactSet, who had forecast per-share earnings of $1.96 and revenue of $21.7 billion.
Even better was the outlook. Pepsi now projects full-year organic revenue growth at 10% and growth in earnings per share at 12%. In April, when the company also has a beat and raise, quarter, it had forecast revenue growth at 8% and EPS growth at 9%.
In premarket trading, the stock jumped 2.5%. The stock had gained just 1.4% this year as of Wednesday’s close, but has outperformed its peers: The S&P 500 Consumer Staples Sector Index is down 0.7%.
“We are very pleased with our performance for the second quarter as our business momentum remains strong,” said Chairman and CEO Ramon Laguarta. “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.”
Pepsi was already outpacing its consumer staple peers over the past 12 months, most recently because of its first quarter, which also came in ahead of expectations and included a raised forecast.
That said, second-quarter volumes did come in slightly below expectations, indicating that price hikes did dent demand more than analysts expected. Investors have been worried about the ability of consumer products companies to keep prices ahead of inflation without hurting the top line.
Nonetheless, robust organic growth across near all of Pepsi’s brands and geographies and its sunny guidance demonstrate that it remains on track to deliver long-term sales growth between 4% and 6%. Likewise a strong showing from the company’s North American beverage business could bode well for
Coca-Cola
‘s (KO) results, due out July 26.
In addition, investors can thank potato chips for Pepsi’s standout quarter. Pepsi’s Frito-Lay North America business, which includes Lay’s, Doritos, and Cheetos, notched growth of 14% across both revenue and profit. Pepsi’s Latin America division was another outperformer, with revenue rising 18% and profit up 41% in the quarter.
Now, that’s something for investors to snack on.
Write to Jack Denton at [email protected]
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