Key Points:
- PepsiCo had a mixed quarter due to lower demand for drinks and snacks in North America.
- PepsiCo expects sales volume in the Quaker Foods division to recover by the end of the year after January’s recalls for potential salmonella contamination.
- $PEP was up 1.48% for the day after earnings, reporting a 0.4% revenue miss but an adjusted EPS beat of 5.6%.
PepsiCo’s Earnings Results:
PepsiCo’s most recent earnings report showed mixed quarterly results due to declining demand for its drinks and snacks in North America.
The lower demand is likely a result of years of price increases.
CEO Ramon Laguarta stated that shoppers across all income levels adjusted their buying habits and opted for cheaper, private-label options.
What were PepsiCo’s earnings results by segment?
Frito-Lay North America’s sales volume dropped by 4%, and Pepsi’s North American beverage unit saw a 3% decline in sales volume after adjustments for pricing and currency changes.
Quaker Foods North America’s volume fell by 17% in the quarter as the division recovers from recalls for potential salmonella contamination in December and January. Pepsi expects the segment’s volume to recover in the second half of the year.
The company also revised its revenue outlook for the full year, expecting organic revenue growth of around 4%, down from its previous forecast of over 4%. However, PepsiCo maintained its earnings growth guidance of at least 8%.
View PepsiCo’s full Q2 earnings results >>>
How is PepsiCo expected to do next quarter?
What will the summer have in store for Pepsi?
Pepsi’s consensus estimates for the next year have coverage from at least 5 Wall Street sell-side analysts, which gives these estimates a Strong trustworthiness rating.
Q3 Expected Results:
- Expected Revenue: $24.1B (up 2.6% from Q3 2023)
- Expected Operating Margins: 16.6% (up 40 basis points from Q3 2023)
- Expected Normalized EPS: $2.31 (up 2.6% from Q3 2023)
- Expected Free Cash Flow: $4.7B (up 1.9% from Q3 2023)
View PepsiCo’s full Q3 earnings expectations >>>
Is PepsiCo a good stock to buy?
What do analysts expect PepsiCo’s next couple of years to look like?
We aggregate Wall Street’s sell-side analyst estimates so that long-time shareholders and prospective investors can better understand what a company’s future performance will look like and, therefore, its stock value today.
It’s important to take analysts’ estimates with a grain of salt because it’s tough for anyone, even investment professionals, to accurately forecast a company’s future performance.
Investment analysts get company forecasts wrong, just like professional meteorologists still get the weather forecast wrong.
Here are PepsiCo’s consensus analyst estimates for the next 5 years:
Notable 5-Year Estimates:
- Expected Revenue CAGR: 4.4%
- Expected Operating CAGR: 6.2%
- Expected Normalized Net Income CAGR: 6.7%
- Expected Free Cash Flow CAGR: 10.2%
See PepsiCo’s full 5-year Analyst Estimates >>>
In addition to the 5-year forecasts, we also like to check the 3-year forecasts.
There’s more uncertainty the farther out you forecast a company’s results, so sometimes you can trust 3-year estimates more than 5-year estimates:
Notable 3-Year Estimates:
- Expected Revenue CAGR: 4.0%
- Expected Operating CAGR: 6.6%
- Expected Normalized Net Income CAGR: 7.2%
- Expected Free Cash Flow CAGR: 14.2%
Final Thoughts:
PepsiCo reported decent earnings results after beating adjusted earnings, but missing revenue estimates due to a lower demand for drinks and snacks in North America.
PepsiCo is a promising company.
But there’s a whole world of promising companies.
If you’re anything like us at TIKR… I bet you’re curious to find out which companies are best for your portfolio.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. We aim to provide informative and engaging analysis to help empower individuals to make their own investment decisions. Neither TIKR nor our authors hold positions in any of the stocks mentioned in this article. Thank you for reading, and happy investing!
