Consumer Products

Lockdown Snacking Keeps PepsiCo Afloat

PepsiCo Inc. (NASDAQ: PEP) reported its most recent quarterly results before the markets opened on Monday. Analysts were looking for $1.25 in earnings per share (EPS) and $15.38 billion in revenue for the fiscal second quarter. Results came in at $1.32 in EPS and revenue of $15.95 billion, while the same period of last year reportedly had EPS of $1.54 and $16.45 billion in revenue.

Management noted that during this quarter the company spent nearly $400 million on costs related to the pandemic, including personal protective equipment. However, management believes that this cost will diminish as time goes on.

During the quarter, net sales dropped 3.1% year over year. Pepsi’s organic revenue, which does not take into account foreign currency, fell 0.3%.

The closure of restaurants and other public venues weighed on Pepsi during this quarter. Ultimately, this precipitated a drop of 7% in organic revenue for Pepsi’s North American beverage unit. However, the company’s juice business has been far more successful as more consumers look at this as a healthy alternative in the era of COVID-19.

At the same time, the Quaker Foods North America segment reported organic growth of 23% as consumers bought more oatmeal for breakfast and baking needs. Frito-Lay North America saw organic sales growth of 6%.

The company noted that its fiscal 2020 guidance is no longer applicable, citing uncertainty with COVID-19. However, the company continues to expect total cash returns to shareholders of roughly $7.5 billion, comprised of dividends of $5.5 billion and share repurchases of $2 billion.

Analysts are calling for $5.34 in EPS and $67.17 billion in revenue the 2020 fiscal full year.

PepsiCo stock traded up more than 2% to $137.31 late Monday morning, in a 52-week range of $101.42 to $147.20. The consensus price target is $144.71.