PepsiCo (PEP), a leading snack food and beverage maker, announced its fiscal 4Q17 and fiscal 2017 results on February 13, 2018. It topped analysts’ revenue and earnings expectations. PEP stock rose 0.2% on February 13. However, it fell 2.7% on February 14 after Evercore downgraded its recommendation to “in line” from “outperform.” The stock recovered 1.7% on February 15.
PEP stock has fallen 7.5% on a YTD (year-to-date) basis. In comparison, the stocks of nonalcoholic beverage peers Coca-Cola (KO), Dr Pepper Snapple (DPS), and Monster Beverage (MNST) have returned -2.4%, 19%, and 3.7%, respectively, on a YTD basis as of February 15.
PepsiCo stock rose 14.2% in 2017, lagging the S&P 500 Index (SPX-INDEX), which rose 19.4%. The company returned $6.5 billion to its shareholders through dividends and share repurchases in 2017. On February 13, 2018, it announced a 15% rise in its annualized dividend per share to $3.71, effective with the dividend expected to be paid in June 2018. PepsiCo is a dividend aristocrat, which is a term used for a company that has increased its dividends for at least 25 consecutive years.
The dividend increase announced on February 13, 2018, marks its 46th consecutive annual dividend increase. It expects to reward its shareholders with $5 billion of dividends and $2 billion of share repurchases in 2018. It also announced a new share repurchase program of up to $15 billion that will begin on July 1, 2018, and expire on June 30, 2021.
In this series, we’ll look in detail at PepsiCo’s revenue, earnings, and margins for fiscal 4Q17 and fiscal 2017. We’ll also look at the performance of the company’s North America Beverages segment. We’ll also see how analysts have revised their price targets since the fourth-quarter results.
We’ll start by looking at PepsiCo’s earnings.