PepsiCo (PEP) stock is down by more than 1% at the start of trading Thursday after the snack food and beverage giant reported mixed results for its second quarter and revised its full-year revenue outlook.
In the 12 weeks ended June 15, PepsiCo’s revenue increased 0.8% year-over-year to $22.5 billion as volumes declined 4% and 3%, respectively, in its Frito-Lay and PepsiCo Beverages segments in North America. Its earnings per share (EPS) increased 9.1% to $2.28 from the year-ago period.
“During the second quarter, our business delivered net revenue growth, strong gross and operating margin expansion and double-digit EPS growth, remaining agile despite facing difficult net revenue growth comparisons versus the prior year, subdued category performance within North America convenient foods and the impacts associated with certain product recalls at Quaker Foods North America,” PepsiCo CEO Ramon Laguarta said 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.
The results were mixed compared with analysts’ expectations. According to CNBC, Wall Street was anticipating revenue of $22.6 billion and earnings of $2.16 per share.
As a result of its soft performance in the first half, PepsiCo revised its full-year revenue guidance. It now expects organic revenue growth of 4% versus its previous guidance of growth of at least 4%. It reiterated its expectation for core EPS of at least $8.15, an increase of 7% from the prior year.
“For the balance of the year, we will further elevate and accelerate our productivity initiatives and make disciplined commercial investments in the marketplace to stimulate growth,” Laguarta said.
Is Pepsi stock a buy, sell or hold?
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 $183.51, representing implied upside of about 14% to current levels. Additionally, the consensus recommendation is a Buy.
Financial service firm CFRA is one of the more bullish outfits on PEP stock with a Buy rating and $200 price target.
“Notably, volumes were higher across both product types across the Europe, Africa, Middle East, and South Asia markets, helping offset weakness in North America, where Beverage volumes were -3% and Frito-Lay was -4%,” CFRA vice president and senior equity analyst Garrett Nelson said in a note following the earnings release.
“Gross margin expanded 120 bps to 55.9% (90 bps ahead of consensus). Despite a second consecutive beat, PEP merely maintained full-year EPS guidance of at least $8.15, which compares to the $8.16 consensus. We continue to believe PEP is just being conservative, but think some investors might view it as a red flag.”
CFRA’s $200 price target represents implied upside of more than 24% to current levels.
Related Content
-
A Guide to Music Streaming ServicesDeals Our guide to music streaming services from Spotify to Amazon Music, Tidal to Apple Music and how to find music streaming deals.
-
Stock Market Today: Markets Reflect Global UncertaintyExuberance fades as investors confront micro challenges and a murkier macro environment.
-
Stock Market Today: Markets Reflect Global Uncertainty
Exuberance fades as investors confront micro challenges and a murkier macro environment.
-
What's Better Than Investing in Crypto? These 'Boring' PicksCryptocurrency may be good for a thrill, but older investors are better off with assets like bonds, guaranteed annuities, CDs and maybe dividend-paying stocks.
-
Four Actions to Lessen Retirement Stress for Women (and Men)Saving for retirement is anxiety-inducing for everyone, especially women. Following this four-part action plan can help improve your financial security.
-
Year-End Retirement Tax Planning Actions if You Have $1 Million or MoreConsider implementing these four strategies before December 31 to potentially improve your tax situation for this year and the future.
-
Five Simple Strategies to Ensure a Happy RetirementEmployer retirement plans are great, but individual responsibility plays a huge role in retirement success. Here's how to empower yourself.
-
25 Financial Moves to Consider Before December 31Tidying up your financial house before the New Year kicks off will put you in a great position to have a financially satisfying and successful 2025.
-
Five Side Hustles You Could Turn Into a Full-Time BusinessYou might be able to capitalize on your expertise in ways you haven't thought of, possibly even leading to quitting your 9-to-5 job to do what you love.
-
Stock Market Today: Nasdaq Nabs New High After Jobs DataThe S&P 500 also closed at its highest level ever, while the Dow Jones Industrial Average was pressured by another down day for UnitedHealth stock.
