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PepsiCo Announces Its Progress in Saving Water

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Price movement

PepsiCo (PEP) has a market cap of $156.0 billion. It rose by 0.50% to close at $107.99 per share on August 29, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.03%, -0.85%, and 9.7%, respectively, on the same day. PEP is trading 0.29% below its 20-day moving average, 0.58% above its 50-day moving average, and 6.4% above its 200-day moving average.

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Related ETFs and peers

The SPDR S&P 500 Growth ETF (SPYG) invests 0.92% of its holdings in PepsiCo. The ETF tracks an index of primarily large-cap growth stocks. The index selects companies from the S&P 500 based on three growth factors. The YTD price movement of SPYG was 6.0% on August 29.

The Consumer Staples Select Sector SPDR ETF (XLP) invests 4.5% of its holdings in PepsiCo. The ETF tracks a market-cap-weighted index of consumer staples stocks drawn from the S&P 500.

The market caps of PepsiCo’s competitors are as follows:

  • Coca-Cola (KO) — $189.4 billion
  • Mondelēz International (MDLZ) — $67.0 billion
  • Dr Pepper Snapple Group (DPS) — $17.4 billion

Latest news on PepsiCo

In a press release on August 29, 2016, PepsiCo “announced continued progress against the company’s strategy to help protect and conserve global water supplies and provide people access to clean, safe water to communities around the world.”

It stated that “PepsiCo’s water conservation efforts saved the company more than $80 million between 2011-2015,” adding that “through the PepsiCo Foundation, the company has partnered with leading non-profit organizations to now reach 9 million people with safe water access since 2006, far exceeding its original goal of 6 million by the end of 2015.”

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PepsiCo’s performance in fiscal 2Q16

PepsiCo reported fiscal 2Q16 net revenues of $15.4 billion, a fall of 3.1% from the net revenues of $15.9 billion in fiscal 2Q15. Revenue from Frito-Lay North America, Quaker Foods North America, and North America Beverages rose by 3.2%, 2.7%, and 0.63%, respectively.

Revenues from its Latin America, Europe Sub-Saharan Africa, and Asia, Middle East, and North Africa segments fell by 22.8%, 5.4%, and 1.5%, respectively, between fiscals 2Q15 and 2Q16. The company’s gross profit margin and operating profit rose by 2.0% and 2.2%, respectively.

Net income and EPS

In fiscal 2Q16, PepsiCo’s net income and EPS (earnings per share) rose to $2.01 billion and $1.38, respectively, compared with $1.98 billion and $1.33 in fiscal 2Q15.

PEP’s cash and cash equivalents and inventories rose by 6.0% and 28.2%, respectively, between fiscals 4Q15 and 1Q16. In fiscal 2Q16, its current ratio and debt-to-equity ratio rose to 1.4x and 4.9x, respectively, compared with 1.3x and 4.8x in fiscal 4Q15.

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Quarterly dividend

PepsiCo has declared a quarterly dividend of ~$0.75 per share on its common stock. The dividend will be paid on September 30, 2016, to shareholders of record at the close of business on September 2, 2016.

Projections

PepsiCo (PEP) made the following projections for fiscal 2016:

  • core EPS of $4.71
  • organic revenue growth of ~4%, which excludes the impact of a 53rd week and structural changes and includes the deconsolidation of its Venezuelan operations
  • productivity savings of ~$1 billion
  • more than $10 billion in cash flow from operating activities
  • free cash flow of more than $7 billion, which excludes certain items
  • net capital spending of ~$3 billion
  • a return of ~$7 billion to its shareholders through dividends of ~$4 billion and share repurchases of ~$3 billion.

In the next part, we’ll take a look at Coca-Cola (KO).

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