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PepsiCo Stock Rises after Crushing Q1 Expectations

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Upbeat results

PepsiCo (PEP) stock had risen 3.0% as of 10:44 AM EDT on April 17 after the company announced better-than-expected earnings results for the first quarter of 2019, which ended on March 23.

PepsiCo’s first-quarter revenue rose 2.6% to $12.88 billion driven by the impressive performance of its Frito-Lay North America segment, an improvement in the performance of its Beverages North America segment, and strong organic growth in its International segment. Analysts had expected the company to see revenue of ~$12.70 billion.

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Foreign currency fluctuations had a three-percentage-point negative impact on the company’s top line growth in the first quarter. Excluding the impact of foreign currency fluctuations and structural changes, PepsiCo delivered impressive organic revenue growth of 5.2% in the quarter.

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PepsiCo’s adjusted EPS rose 1.0% to $0.97 in the first quarter and exceeded analysts’ consensus estimate of $0.92. The company’s bottom line growth was driven by higher revenue and productivity savings and partially offset by higher commodity costs and marketing spending. Currency headwinds had an unfavorable impact of two percentage points on PepsiCo’s EPS growth.

Full-year guidance

PepsiCo reaffirmed its organic revenue growth guidance of 4% in 2019. The company expects its adjusted EPS to fall to $5.50 compared to $5.66 in 2018.

PepsiCo is undertaking various initiatives to launch better beverage and snack food products. The company is working on producing snack foods and beverages with lower salt, sugar, and saturated fat content to stay in line with consumers’ growing concerns about health. Last year, PepsiCo acquired Bare Foods, a manufacturer of baked fruit and vegetable snacks.

On April 16, PepsiCo stock had risen 10.8% on a year-to-date basis compared to the 0.8% fall in the stock price of its rival the Coca-Cola Company (KO).

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