Please ensure Javascript is enabled for purposes of website accessibility

Pepsi Earnings Show Strong Snack Demand

By Demitri Kalogeropoulos - Feb 13, 2020 at 9:13AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company sees a return to earnings growth in 2020 after a rare decline last year.

PepsiCo (PEP 0.63%) on Thursday reported robust global sales growth at the close of its fiscal 2019 year. The company also projected steady revenue gains in 2020, along with a return to earnings growth.

Two women drinking soda outside.

Image source: Getty Images.

What happened?

Pepsi's organic sales rose 4.3% in the fourth quarter of 2019, which translated into a 4.5% increase for the full year. That result edged past the 4% target that management had initially forecast thanks mainly to gains in the Frito Lay snack division. The consumer staples giant also beat its own outlook for cash flow and operating income .

It wasn't all good news in the report, as Pepsi's beverage business grew by just 3% in 2019 compared to 6% for rival Coca-Cola (KO 1.63%). The company also posted weaker profitability as core earnings fell 1%.

What's next?

Pepsi predicted a steady year ahead for sales growth, with gains likely landing at 4% for the third consecutive year. Coke's outlook is a bit brighter, calling for 5% growth in its more focused beverage portfolio.

Pepsi also projected a return to earnings growth in 2020 as per share profits rise 7%. The company is again expecting to invest heavily in supporting its beverage and snack foods portfolio. However, its 2019 price increases and cost cuts should allow for faster earnings gains this year, management says.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pepsico, Inc. Stock Quote
Pepsico, Inc.
PEP
$162.21 (0.63%) $1.01
The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$60.98 (1.63%) $0.98

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.