PepsiCo Stock: An Earnings Preview

PepsiCo (NYSE: PEP  ) will report earnings on Wednesday. Here's what you need to watch for in the company's results.

Great expectations
The first issue that needs to be addressed is whether the beverage and snack food giant met Wall Street's expectations. Analysts peg profits for PepsiCo at $1.19 per share this quarter. PepsiCo booked earnings per share of $1.12 in the same quarter last year, so the company is expecting an improvement in profit growth. PepsiCo reported approximately $16 billion in sales for the second quarter of last year, and $65 billion for the full-year 2012.

Revenue growth
PepsiCo's first-quarter 2013 overall organic net revenues grew 4.4%. Even though PepsiCo has felt the effects of a recent pullback in domestic soda sales, about 65% of the company's beverage business comes from non-carbonated offerings, a segment that shows real growth potential, notably in developed markets.

In relatively untapped emerging markets, both PepsiCo and rival Coca-Cola are spending billions of dollars in the pursuit of vigorous growth. For example, India represents one of the last untouched markets for cola companies. As a result, Pepsi and Coke are fighting tooth and nail to gain market share for their namesake brands. Indian consumers sip 14 servings of soft drinks annually, while Americans guzzle more than 28 times as much cola. Yet the Asian nation's population is nearly four times that of the U.S.

PepsiCo's true dominance is in its status as the world's foremost snack-food maker, boasting roughly 38% of U.S. salty snack retail sales. Meanwhile, closest competitors Kraft Foods and Kellogg hold about 9% and 5%, respectively, of domestic salty snack sales.

Outcomes from restructuring efforts
PepsiCo streamlined its product portfolio and enhanced its marketing efforts in 2012. Initially, its stock price hadn't popped as a result of the company's restructuring efforts. However, PepsiCo's investments now appear to be translating into top-line and bottom-line growth, and the company is on track to deliver a targeted $3 billion in productivity savings by 2015. With PepsiCo stock trading near its all-time high, this is providing longtime shareholders with a refreshing jolt.

Foolish takeaway
When PepsiCo releases its second-quarter results on Wednesday, I'll be watching to see exactly if and how the company achieved sales growth in both its beverage and snack-food businesses. I'll also be looking for further evidence of success from the company's restructuring efforts. Watch for these metrics to give a mid-year peek into how PepsiCo is performing.

Many longtime PepsiCo shareholders love the stock for its tasty dividend yield. In fact, PepsiCo is one of nine great dividend-paying stocks we feature in a free report. If you're on the lookout for more high-yielding stocks, check out our special free report outlining another eight dependable dividend payers. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2546822, ~/Articles/ArticleHandler.aspx, 8/31/2014 4:39:05 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement