Posted quarterly earnings and revenue that exceeded analysts’ forecasts, even as demand for its food and beverages declined in North America.
Before a company releases its earnings report, it's important to pay close attention to any changes in earnings estimates. These adjustments can significantly influence how investors may respond to the stock. A wealth of research has shown a strong link between shifts in earnings forecasts and a stock’s short-term price movement.
Although investors typically rely on consensus earnings and revenue estimates to evaluate a company’s quarterly performance, examining analysts’ projections for specific key metrics can offer a deeper and more complete insight.
Net sales grew by 1% to reach $22.73 billion, while the company’s organic revenue — which excludes the impact of acquisitions, divestitures, and currency fluctuations — rose 2.1% for the quarter.
However, the company is still seeing softer demand for its products. Pepsi’s worldwide volume fell 1.5% for its food and was flat for its drinks. The metric strips out pricing and foreign exchange changes.
Sales volume declined once more in North America, though CEO Ramon LaGuardia noted in a statement that the U.S. business is showing signs of recovery. The company’s North American food segment, which includes Frito-Lay and Quaker Foods—experienced a 1% drop in volume.
PepsiCo’s beverage segment continues losing share, and weak consumer spending amid inflation fears, shifting health priorities, and possibly a backlash against ultra-processed foods is hitting its formerly fast-growing snack business.
Deutsche Bank analyst Steve Powers has a more optimistic view of the packaged-food and beverage giant. “We continue to believe the intrinsic value of PepsiCo exceeds its current trading price,” he wrote in a note last month.
In summary, for second-quarter earnings, Powers stated that he specifically looks for PepsiCo management to provide updates on how it plans to appeal to consumers’ desire for value, sharpen innovation to meet recent trends like high protein, and accelerate productivity through efficiency efforts.
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