PepsiCo Stock Falls Despite Earnings Beat, Dividend Hike
PepsiCo stock is lower Tuesday after the soft drink maker's top-line miss offsets an earnings beat and dividend hike. Here's what to know.
PepsiCo (PEP) stock is falling Tuesday as the snack food and beverage maker's revenue miss offsets an earnings beat and another dividend increase.
In the quarter ending December 28, PepsiCo's revenue slipped 0.2% year over year to $27.8 billion. Its earnings per share (EPS) were up 10.1% from the year-ago period to $1.96.
"Our businesses remained resilient in 2024, despite subdued category performance trends in North America, the continued impacts related to a recall in our Quaker Foods North America division and business disruptions due to geopolitical tensions in certain international markets," said PepsiCo CEO Ramon Laguarta in a statement.
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Laguarta added that Pepsi's "multiyear productivity initiatives" have allowed the company the ability to invest in its business "and deliver improvements in our gross margin, operating margin expansion and EPS in 2024."
The results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $27.9 billion and earnings of $1.94 per share, according to CNBC.
For its full fiscal year, PepsiCo said it expects to achieve a low-single-digit increase in organic revenue and a mid-single-digit rise in earnings per share.
"Looking ahead to 2025, we will continue to build upon the successful expansion of our international business, while also taking actions to improve performance in North America," Laguarta said.
PepsiCo also announced a 5% increase to its quarterly dividend, bringing its annual rate to $5.69 per share. This marks the 53rd consecutive annual increase to PEP's dividend, making it one of the best dividend stocks to buy for dependable dividend growth.
Is PepsiCo stock a buy, sell or hold?
PepsiCo has struggled on the price charts over the past 12 months, down 9% on a total return basis (price change plus dividends) vs the S&P 500's 22% gain. Yet Wall Street is bullish on the consumer staples stock.
According to S&P Global Market Intelligence, the average analyst target price for PEP stock is $172.62, representing implied upside of roughly 17% from current levels. Additionally, the consensus recommendation is Buy.
CFRA Research analyst Garrett Nelson is one of those with a Buy rating on the blue chip stock, though he lowered his price target after earnings to $175 from $190.
PepsiCo's bottom-line beat was "driven by stronger-than-expected margins," Nelson says, as both revenue and volume declined over the three-month period. And while PEP's full-year EPS guidance arrives "slightly below the current consensus," Nelson notes that the "company's masterful track record of providing conservative guidance and then exceeding it."
He adds that despite industry headwinds, he still sees value in PEP despite the stock's recent slide.
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