PepsiCo reported a modest decline in stock price premarket Tuesday, down 0.5%, even after announcing first-quarter earnings and revenue that surpassed analysts’ expectations. The company posted adjusted earnings per share (EPS) of $1.61, which was $0.09 higher than the consensus estimate of $1.52. Revenue for the quarter was reported at $18.25 billion, exceeding the consensus estimate of $18.1 billion.
The company’s performance was particularly bolstered by its international business, which saw strong results. Despite facing challenges such as product recalls at Quaker Foods North America and a tough comparison to the previous year’s revenue growth, PepsiCo managed to achieve year-over-year (YoY) growth in net revenue, operating profit margin, and EPS.
Chairman and CEO Ramon Laguarta commented on the results, highlighting the company’s agility and the sequential improvement in volume trends. “We delivered year-over-year growth in our net revenue, operating profit margin, and EPS – despite the impact of certain product recalls at Quaker Foods North America and a difficult net revenue growth comparison from the prior year,” said Laguarta.
Looking ahead, PepsiCo continues to expect at least a 4% increase in organic revenue and at least an 8% increase in core constant currency EPS for the full year 2024. The company anticipates a core annual effective tax rate of 20% and total cash returns to shareholders of approximately $8.2 billion, including dividends of $7.2 billion and share repurchases of $1.0 billion. However, they also forecast a 1-percentage-point foreign exchange translation headwind to impact reported net revenue and core EPS growth. This guidance suggests a core EPS of at least $8.15 for 2024, marking a 7% increase compared to the 2023 core EPS of $7.62.
Despite the positive earnings and revenue beat, the slight dip in stock price reflects investor caution. The market’s reaction may be attributed to broader market trends or potentially to the company’s cautious outlook in light of foreign exchange headwinds.
