Pepsi Stock Soars 2% as Q2 Performance Beats Expectations
PepsiCo (PEP) experienced a 2.1% surge in premarket trading on Thursday following its impressive second-quarter performance, which surpassed Wall Street consensus. The renowned food and soft drink company reported adjusted earnings per share (EPS) of $2.09, exceeding analyst expectations by 13 cents. Additionally, its revenue of $22.32 billion marked a YoY increase of over 10% and exceeded consensus by nearly $600 million.
Despite facing volume declines in certain regions and segments of its business, PepsiCo managed to overcome these challenges through its pricing power. Chairman and CEO Ramon Laguarta expressed satisfaction with the company’s second-quarter performance, stating, We are very pleased with our performance […] as our business momentum remains strong. As a result, PepsiCo has revised its full-year organic revenue growth and core constant currency EPS projections to 10% and 12%, respectively.
Notably, both the Quaker Foods and PepsiCo Beverages divisions saw annual volume declines of 5% and 4.5%, respectively, in their North American operations. The Africa, Middle East, and South Asia division also struggled. However, the European convenient foods and beverages segments, as well as the Asia/Pacific division, witnessed growth. Europe, in particular, stood out with a remarkable 46% YoY increase in profits, making it the best-performing region for PepsiCo.
PepsiCo’s management remains confident in its future prospects, reiterating its expectation of $6.7 billion in dividends for 2023 and $1 billion in share repurchases. The company has also raised its full-year guidance for core EPS to $7.47, representing a 10% growth from 2022’s $6.79.
Regarding PepsiCo’s stock performance, recent indicators have shown a bearish trend, including the Moving Average Convergence Divergence (MACD) and the 9-day Simple Moving Average (SMA) trading below the 21-day average. However, the second-quarter earnings report may be a turning point, potentially reversing these indicators to a bullish stance.
Looking ahead, if PepsiCo’s stock bulls continue to build on the strong beat-and-raise performance of the second quarter, the focus will shift towards recent range highs at $188 and $196.88.
Over the past year, PepsiCo’s stock has been on an upward trajectory since hitting a low point during the pandemic in March 2020. The current bottom trendline provides support around $176.50, which bolsters investors’ confidence at the current price level.
In conclusion, PepsiCo has delivered a solid second-quarter performance that surpassed expectations, driven by its pricing power and strong business momentum. The company’s stock has exhibited bearish tendencies but may see a turnaround following the impressive earnings report. With the revised full-year guidance and optimistic outlook, PepsiCo remains well-positioned for future growth.
