Companies and Brands
The Real Driving Force Behind Pepsi's Earnings Gains
Published:
Last Updated:
PepsiCo Inc. (NYSE: PEP) reported its third-quarter financial results before the markets opened on Tuesday and one key analyst has already weighed in on the company. For 24/7 Wall St.’s earlier coverage on the earnings report goes more in-depth on Venezuela.
The company posted $1.35 in earnings per share (EPS) on $16.3 billion in revenue, compared to consensus estimates from Thomson Reuters of $1.26 in EPS on revenue of $16.15 billion. In the same period of the previous year, the company reported EPS of $1.36 and $17.22 billion in revenue.
Merrill Lynch pointed out that Pepsi’s solid third-quarter results included upside to sales and profits across all three North America businesses and better-than-expected results relative to its forecasts. Full-year 2015 constant-currency core EPS guidance was increased from 8% to 9%, which implies $4.54 net of currencies, versus Merrill Lynch’s current forecast of $4.50. The consensus estimate calls for an EPS of $4.52 in 2015.
ALSO READ: 7 Fresh Analyst Stock Picks With Massive Upside
Merrill Lynch’s Bryan Spillane and Lisa Lewandowski stated in their report:
Note that the guidance includes a change of accounting treatment for Venezuela, in which Pepsi will no longer report the segment in its consolidated financial statements. We estimate that the effect of this change to be a $0.03 drag in the fourth quarter and $0.10 in full year 2016.
Other key considerations from the quarter that Merrill Lynch highlighted were:
- Frito Lay North America volumes were +0.5% (there were some concerns in the market that it may be worse).
- Quaker Foods posted strong margin growth against a difficult comparison.
- Latin America segment margins were below our expectation, due to a combination of currency, Venezuela and a weakening macro backdrop.
- Pepsi guided to the high end of its expected range for free cash flow ($7B).
As a result, Merrill Lynch reiterated a Buy rating for Pepsi with a $107 price objective.
Shares of Pepsi were up 1.6% to $97.33 late Monday morning. The stock has a consensus analyst price target of $104.33 and a 52-week trading range of $76.48 to $100.76.
ALSO READ: Huge Carl Icahn Energy Purchases Highlight Recent Insider Buying
The #1 Thing to Do Before You Claim Social Security (Sponsor)
Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.
A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
