PepsiCo, Inc. (ticker: PEP) investors got some good news on Tuesday morning when the company reported earnings and revenue beats for the most recent quarter and raised its earnings guidance for the full year. PepsiCo’s strong quarter was driven by higher North American soda and snack prices.
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PEP stock reported second quarter earnings per share (excluding items) of $1.50 on revenue of $15.71 billion. Both numbers topped consensus Wall Street forecasts of $1.40 and $15.60 billion, respectively.
In addition, PepsiCo raised its full-year EPS guidance from $5.09 to $5.13 and said the company will not be hit as hard by foreign exchange headwinds as previously feared.
CEO Indra Nooyi says the company’s second-quarter results were in line with expectations and that PepsiCo is well on its way to meeting its full-year goals.
“The power and durability of our brand and product portfolios, strong marketplace execution, and the balance of our geographic footprint enabled us to deliver strong operating results in the midst of pockets of macroeconomic challenges and increasingly dynamic retail and consumer landscapes,” Nooyi says.
PepsiCo and rival Coca-Cola Co ( KO) have been combating slumping soda demand by raising prices and focusing on higher-margin products in major developed markets. PepsiCo reported that North American beverage sales volume was flat on the quarter, but net pricing was up 1 percent.
PepsiCo has an extra layer of protection from softening soda demand because of its snack business. North American Frito-Lay revenue was up 3 percent in the quarter. Jefferies recently reported that PepsiCo’s snack business is growing between 5 and 6 percent annually, while its beverage business is growing at only a 2 percent pace.
PepsiCo’s snack business is what makes the company’s performance stand out among its peer group, UBS analyst Stephen Powers said on CNBC Tuesday.
“They beat on the top line — they put up 3.1 percent organic growth, which was probably a point better than feared — and it was driven by snacks. Frito-Lay North America was up 3.5 percent. I think relative to any U.S. food company that’s going to be best-in-class, and it is what separates Pepsi from its peers,” Powers said.
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Despite the across-the-board earnings beat, investors demonstrated a muted initial reaction to PepsiCo’s earnings report. PEP stock opened Tuesday’s session down 0.4 percent.
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PepsiCo (PEP) Reports Second-Quarter Beat on Snack Strength originally appeared on usnews.com
