PepsiCo, Inc.: An Earnings Preview

PepsiCo (NYSE: PEP  ) will report earnings on Wednesday, July 23. Here's what you need to watch for in the company's results.

Earnings 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 $1.23 per share this quarter. PepsiCo booked earnings per share of $1.31 in the same quarter last year, so the company is expecting deterioration in profit growth. PepsiCo reported $16.8 billion in sales for the second-quarter of last year and $66.4 billion for the full-year 2013.

Revenue growth
Domestic carbonated soft drink sales have stalled out in the past decade. As a result, PepsiCo has suffered from sluggish soda sales. Carbonated beverage volumes were down 1% for the New York-based company during the first quarter.

Yet PepsiCo's Q1 2014 organic revenues grew 4%. That's because the company derives more than half its revenues from its snack business, which  makes up two-thirds of the company's revenue growth. Better yet, the salty-snack powerhouse holds nearly 37% of the U.S. savory snack market . Its PepsiCo Americas Food and Frito-Lay North America divisions saw organic revenues grow 5% and 4%, respectively, during the first quarter. PepsiCo has also enjoyed strong international snack growth, with the company posting 9% organic revenue growth in its Latin American Foods division and strong snack volume growth in Asia, Middle East, and Africa.

Profitability-boosting efforts
For the first several years after PepsiCo CEO Indra Nooyi took the helm, investors were frustrated with the company's sluggish stock performance. But that's recently changed. Nooyi's top priorities since 2012 have included reinvesting in core brands, trimming costs, and increasing profitability. The company served up roughly $1 billion of annual productivity savings in both 2012 and 2013. During those two years, PepsiCo's share price increased 25%, outpacing rival Cola-Cola's stock performance and further endorsing Nooyi's efforts. The maker of Quaker Oats, Doritos, Naked Juice, and Gatorade is on track to deliver a targeted $1 billion of productivity savings this year. The company also expects to return $8.7 billion to shareholders in 2014, comprised of approximately $5.0 billion in share repurchases and $3.7 billion in dividends. PepsiCo's stock currently pays a dividend yield of 2.9%. 

Foolish takeaway
When PepsiCo releases its second-quarter results on Wednesday, I'll be watching to see if and how the company achieved earnings and sales growth in both its beverage and salty-snack businesses. I'll also be looking for any updates on PepsiCo's continued profitability-boosting efforts.

Leaked: 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, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. 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!

Read/Post Comments (0) | Recommend This Article (1)

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: 3032498, ~/Articles/ArticleHandler.aspx, 9/5/2015 4:09:43 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...

Nicole Seghetti

Nicole is a contributing writer for The Motley Fool. She's worked as a financial advisor and planner for over a decade. Nicole holds an MBA from the University of the Pacific and a chemical engineering degree from Purdue University. She welcomes you to follow her on Twitter.

Today's Market

updated 6 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:00 PM
PEP $90.92 Down -1.21 -1.31%
PepsiCo CAPS Rating: *****