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.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
Related Content
-
The Best Stocks of the CenturyAs we near the 25-year mark, we looked at which stocks have returned the most. Here are the 10 best stocks of the century so far.
-
Barry Ritholtz: How to Spot Bad Investing Advice and Build a Resilient PortfolioBarry Ritholtz, a veteran money manager, shares common investing errors we all make and how to avoid them.
-
The Best Stocks of the Century
As we near the 25-year mark, we looked at which stocks have returned the most. Here are the 10 best stocks of the century so far.
-
Barry Ritholtz: How to Spot Bad Investing Advice and Build a Resilient Portfolio
Barry Ritholtz, a veteran money manager, shares common investing errors we all make and how to avoid them.
-
Value vs Growth Investing Isn't So SimpleThe difference between growth and value stocks isn't black and white.
-
How the Stock Market Performed in the First 6 Months of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
-
A Financial Planner's Prescription for the Headache of Multiple Retirement AccountsHaving a bunch of retirement accounts can cause unnecessary complications. Consolidation can make it easier to manage your savings and potentially improve investment outcomes.
-
Overpaying for Financial Advice? A Financial Planner's Guide to FeesTake five minutes to review how much you're paying for financial advice. If you're overpaying, you could be better off with an adviser who charges a flat fee.
-
The Big Red Bucket Theory: A Financial Adviser's Simple Way to Visualize Your Retirement PlanWhen you think about retirement, picture a big red bucket brimming with all the money you've saved. It's everything you've got, and it has to last you.
-
Dow Leads as Merck, Amgen Gain: Stock Market TodaySecond-quarter earnings season remained top of mind Tuesday, with Coca-Cola and GM among those reporting.
