PepsiCo Inc. (NYSE: PEP) is scheduled to release its second-quarter financial results before the markets open on Thursday. The consensus estimates are calling for $1.30 in earnings per share (EPS) on $15.37 billion in revenue. In the same period of last year, the company posted EPS of $1.32 and $15.92 billion in revenue.
The company said its strong first-quarter operating results were driven by balanced execution of its commercial agenda and productivity programs. These marketing initiatives and new product launches are generating solid organic top line growth, and the focus on driving greater efficiency throughout operations contributed significantly to an attractive core gross margin expansion. Pepsi was off to a strong start to the year.
In the fourth-quarter earnings report, Pepsi increased its annual dividend to $3.01 per share from $2.81 and said it would return about $7 billion to shareholders this year, with about $3 billion through buybacks. However, the company forecast 2016 adjusted earnings below many analyst estimates, citing a strong dollar and the exclusion of its Venezuelan business from its financial statements. While this is a short-term headwind, the stock still makes good sense for conservative accounts.
Prior to the release of the earnings report, a few analysts weighed in on Pepsi:
- Jefferies reiterated a Buy rating with a $119 price target.
- Goldman Sachs reiterated a Neutral rating with a $104 price target.
- Susquehanna reiterated a Neutral rating.
- Credit Agricole reiterated an Outperform rating.
- Deutsche Bank reiterated a Buy rating with a $115 price target.
Excluding Wednesday’s move, Pepsi has outperformed the broad markets, with the stock up 8% year to date. Over the past 52 weeks, the stock was up over 16%.
Shares of Pepsi were last seen down 0.5% at $105.91, with a consensus analyst price target of $112.28 and a 52-week trading range of $76.48 to $106.98.
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