PepsiCo’s Q4 Results: Another Strong Quarter!



PepsiCo (NYSE:PEP) posted strong fourth-quarter results yesterday. The fourth-quarter earnings impressed investors and analysts. The company’s revenue and earnings increased in the fourth quarter. However, the stock rose slightly by 0.27%. Let’s see how the company performed in the fourth quarter.

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PepsiCo Q4 results beat the expectations

PepsiCo reported 5.7% YoY (year-over-year) growth in its revenue to $20.6 billion. The revenue beat analysts’ expectations by 1.8%. For the fiscal year, the revenue grew 3.8% to $67.1 billion and beat analysts’ estimates by 0.56%. The company also saw a 4% growth in organic revenue. PepsiCo also saw an 8% growth in the developed and emerging markets. The company also reported a 2.6% decline in its earnings to $1.45. However, PepsiCo beat analysts’ estimates of $1.44 per share.

The company saw growth in all of its divisions. Frito-Lay North America saw a 4.5% rise in organic revenue mainly due to salty and savory snacks in 2019. The company mentioned that its “investments in innovation, marketing, and consumer insights, supply chain and manufacturing, and go-to-market capacity” for Frito helped drive its revenue. All of Frito’s brands like Doritos, Tostitos, Lay’s, Cheetos, Ruffles, and Fritos saw growth. The company’s trademark Pepsi saw revenue growth for the sixth consecutive quarter. Also, Pepsi Zero posted double-digit growth. PepsiCo saw growth in all of its international markets as well.

PepsiCo hopes to return around $7.5 billion to shareholders in fiscal 2020. The returns would include $5.5 billion in dividends and $2 billion in share repurchases.

Analysts raised the target price

After the impressive results, many analysts raised PepsiCo’s target price. Cowen increased the target price to $164 from $155. Citigroup raised the target price to $157 from $143. Jefferies increased the target price to $145 from $140. J.P. Morgan raised the target price to $158 from $154. Credit Suisse increased it to $140 from $126, while SunTrust Robinson raised it to $135 from $125.

Most analysts still seem bullish on PepsiCo stock after results. The ratings remained the same as before the earnings. Among the 20 analysts that cover the stock, 12 recommend a “hold,” four recommend a “buy,” three recommend a “strong-buy,” and one recommends a “sell.”

In comparison, 11 out of 22 analysts recommend a “buy” for Coca-Cola (NYSE:KO) stock and three recommend a “strong-buy” after its strong fourth-quarter results.

Currently, the average target price on PepsiCo stock increased to $144.12 from $140.59. The new target price is 2% lower than its closing price yesterday. In 2020, Coca-Cola has risen by 7.7% year-to-date, while PepsiCo has risen by 7.17%.


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