PepsiCo Inc. (Nasdaq: PEP) reported better-than-anticipated fiscal 2021 third-quarter earnings and revenues. The company also lifted its FY 2021 outlook as relaxation of pandemic prohibitions has led to a rise in sales at eateries and cinema halls. Following the impressive results and upward revision of the FY 2021 outlook, the stock of Pepsi rallied 0.59% or $0.89 to close at $151.09.
The Purchase, New York-based brand owner of Doritos Tortillas Chips, reported third-quarter revenues of $20.189 billion, an increase of 11.60% from $18.091 billion in a similar period last year.
For the quarter ended September 4th, 2021, Pepsi posted a net income of $2.224 billion, or $1.60 per share, down from $2.291 billion, or $1.65 a share, in the quarter ended September 5th, 2020.
Excluding mark-to-market net impact, restructuring and impairment charges, and tax expense related to the TCJ Act, the Q3 2021 core earnings were $2.483 billion, or $1.79 per share, compared with $2.311 billion, or $1.66 a share in Q3 2020.
Analysts surveyed by Thomson Reuters had anticipated the company to report earnings of $1.73 per share on revenues of $19.39 billion for the quarter.
Commenting on the upbeat quarterly results, Chairman and CEO Ramon Laguarta said: “Our strong year-to-date results demonstrate that the investments we have made towards becoming a Faster, Stronger, and Better company are working.”
Segment-wise,
- Frito-Lay North America revenues rose by 5.77% y-o-y to $4.653 billion.
- Quaker Foods North America revenues were $618 million, an increase of $10 million from last year.
- PepsiCo Beverages North America revenues were $6.402 billion, up 7.45% on a y-o-y basis.
- Latin America revenues increased 2.70% to $2.10 billion.
- Europe revenues were $3.612 billion, reflecting a growth of 8.70% from the prior-year period.
- Africa, Middle East, and South Asia revenues were $1.665 billion, up 3.30% from the earlier year.
- Asia Pacific, Australia, New Zealand, and China Region revenues increased 2.69% y-o-y to $1.139 billion.
Looking ahead, Pepsi now anticipates recording an FY 2021 revenue growth of about 8%, up from 6% projected earlier. The company also said that it now expects core constant currency EPS growth of at least 11%, versus 11% forecast earlier. Likewise, a minimum of 12% core earnings per share growth is anticipated by the company, compared with 12% issued previously.
Analysts are anticipating FY21 revenue growth of 9.50% and an earnings increase of 13%. Furthermore, in FY 2022, revenue and core constant currency earnings per share growth are forecast to reflect the long-term goals of the company.
Furthermore, the company continues to anticipate a core annual effective tax rate of about 21% and aggregate cash returns of roughly $5.90 billion ($5.80 billion in cash and share repurchases of $106 million) to shareholders. Pepsi has finished its share repurchase program and does not anticipate carrying out any share repurchases during the remaining portion of this year.
Food-related firms face issues with rising prices of ingredients such as cooking oil, in addition to a surge in Labor, fuel, and freight costs.
With respect to the supply chain issues faced by many companies in the post-pandemic era, the CEO said that the company “carefully navigating a dynamic and volatile supply chain and cost environment.”
The earnings and revenue beat and upward revision of FY 2021 estimates are expected to keep the stock of Pepsi range-bound with bullish bias in the short term.
The historical price chart indicates that the stock has broken above the ascending triangle. Additionally, the Chaikin money flow indicator also has a positive reading. Therefore, we are anticipating the stock to remain in an uptrend in the short term.
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