Today, shares of PepsiCo (PEP, up 7.50%) are on the rise due to the company’s impressive second-quarter earnings performance. Surpassing market predictions, this packaged food and beverage titan demonstrated resilience by outperforming expectations. Although growth was relatively slow, it indicated a positive trend compared to the first quarter.
As of 12:12 p.m. ET, the stock was up 6.8% on the news.
PepsiCo gets back to growth
Prior to the financial report, PepsiCo’s shares had been performing poorly. Therefore, even minor indications suggesting the company’s progress was on track could significantly lift the share price.
In this past quarter, our total revenue increased by 1%, but when you exclude the effects of divestitures, acquisitions, and currency fluctuations, organic revenue grew by 2.1%. The reported revenue for the quarter was $22.7 billion, which surpassed expectations that put it at $22.3 billion.
In my excitement, I’d like to share some insights from our recent financial performance. Despite a surge in costs, revenue growth didn’t quite keep pace, leading to a decrease in gross profit during that period. Interestingly, this dip resulted in a 5% drop in our core earnings per share, landing at $2.12, which surprisingly surpassed the anticipated consensus of $2.03.
Three out of four international divisions of the company saw an increase in organic revenue by 5% or more. However, Pepsi Foods North America (mainly Frito-Lay) struggled, with a decrease of 2% in organic revenue, indicating that consumers might be reducing their spending or opting for cheaper alternatives, as overall consumer confidence has been low.
In simpler terms, CEO Ramon Laguarta expressed that he is optimistic about the increase in our overall income compared to the last quarter. He also mentioned that our various businesses have been managing well amidst difficult circumstances.
What’s next for PepsiCo?
By the year 2025, PepsiCo anticipates an increment of less than 10% in their organic earnings, with their core earnings per share remaining stable when adjusted for inflation.
Despite the company’s larger-scale difficulties, this appears to have been sufficient to satisfy investors. Given the recent stock drop, its dividend now presents an appealing return of 4.3%.
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2025-07-17 23:48