PepsiCo, Inc. PEP shares was trading up 3.7% on Wednesday after the soda and snacks giant reported better-than-expected third-quarter sales and earnings and raised its full-year guidance.
The payment: PepsiCo reported revenue growth of 9% in the third quarter and is forecasting full-year organic revenue growth of 12%, up from the previous guidance of 10%. The company also expects currency-neutral core earnings per share to be up 10% this year.
Related link: PepsiCo ends production of Pepsi, 7UP in Russia: Reuters
PepsiCo reported 4% sales growth for beverages in North America, 15% sales growth for Quaker Food in North America and 20% sales growth for Frito-Lay snacks in North America this quarter. PepsiCo has also expanded its focus into energy drinks. The company took a $550 million stake in Celsius Holdings in August and recently launched Gatorade FastTwitch.
PepsiCo’s strong quarter was particularly impressive given that PepsiCo’s international business faces headwinds from the strong U.S. dollar. So far, PepsiCo has managed to compensate for collapsing sales volumes and pass on rising costs to customers through price increases.
Related link: PepsiCo raises full-year guidance after solid Q3 success
Analyst take: Following the earnings report, Bank of America analyst Bryan Spillane said PepsiCo’s clean beat-and-raise quarter showed the company’s strong momentum in a difficult inflationary environment.
“We believe PEP’s premium average vs. soft drinks of 22.9x is justified by their strengthened position and pricing power,” said Spillane.
Bank of America has a buy rating and a price target of $190 on PepsiCo.
Gasoline Gas Take: PepsiCo’s strong quarter bodes well for the competitor Coca Cola Co KOwhich is expected to report on October 25th. Both PepsiCo and Coca-Cola stock have held up well in a tough market so far in 2022, falling just 3.2% and 6%, respectively.
