PepsiCo (PEP, Financial) jumped 2.95% to $115.91 per share on the Nasdaq on Friday after having matched consensus on the fourth-quarter non-GAAP net profit of $1.49, which was a 13.7% jump compared to prior-year quarter.
Concerning GAAP net profit, the company has recorded a positive reversal to $4.83 per share in the fourth quarter of 2018 from a loss of 50 cents per share in the fourth quarter of 2017.
In line with expectations, fourth quarter net revenues were $19.52 billion, flat year-over-year. Foreign currencies produced a 4% negative impact on total net revenues in the U.S. dollar.
PepsiCo also reported a growth of 4.6% in the fourth quarter organic revenue.
Fourth-quarter 2018 net revenues were shared among the following segments. Decreases and increases are on a year over year basis. Frito-Lay North America increased 4% to $5 billion. Quaker Foods North America decreased 0.5% to $770 million. Latin America declined 1% to $2.42 billion. North America Beverages jumped 2% to $6.01 billion. Europe/ Sub-Saharan Africa went 3% down to $3.58 billion. Asia, Middle East and North Africa segment fell 8% to $1.75 billion.
The company closed full fiscal 2018 recording total revenues of $64.66 billion, gross profit of $35.28 billion, operating profit of $10.11 billion and net income of $12.52 billion. Compared to 2017, total revenues and gross profit jumped 2%, operating profit declined 2% and net income grew 158%.
The gross profit margin was 54.56% in 2018 versus 54.67% in 2017 and the operating profit margin was 15.64% in 2018 compared to 16.18% in 2017.
The chart below illustrates the trends in PepsiCo’s total net revenues over the last five years:
The company has provided its shareholders with the guidance for full fiscal 2019. PepsiCo predicts that organic revenue will grow 4%, core net profit will be $5.50 per share and net capex will reach $4.5 billion. Further, the operating cash flow is expected to be about $9 billion and the free cash flow should, therefore, result in approximately $5 billion.
Besides capital growth, PepsiCo will allocate the free cash flow for dividend payment. The company has hiked the cash annualized dividend by 3% to $3.82 per share. Shareholders will enjoy the increased cash quarterly dividend of 95.5 per ordinary share sometime in June. Instead, the payment of the first cash quarterly dividend for 2019, which will still be 92.8 cents, will happen on March 29 for shareholders of record March 1. The ex-dividend date is Feb. 28. Based on the share price at close Friday, the stock has a forward dividend yield of 3.3% versus an industry median of 2.21%.
The company closed fiscal 2018 with 10.99 billion in cash on hand and securities including restricted cash. In addition, the company will spend about $3 billion for the repurchase of its own common shares.
After a 4% jump for the past year through Feb. 15, the share price is above the 200-, 100- and 50-day simple moving average lines. The market capitalization of the stock is $163.32 billion and the 52-week range is $95.94 to $122.00.
Wall Street has issued a recommendation rating of 2.5 out of 5 and an average target price of $115.05 per share of PepsiCo.
Disclosure: I have no positions in any security mentioned.
