Shares of PepsiCo (PEP, Financial) experienced a significant uptick, climbing 6.7% following a robust earnings report that surpassed market expectations. The positive momentum in the stock was fueled by an outperforming revenue increase and a commendable earnings per share result, which unexpectedly outpaced analysts' predictions. Currently, PepsiCo’s stock is priced at $144.42.
PepsiCo (PEP, Financial) reported a modest revenue growth of 1% for the quarter, with organic revenue advancing by 2.1% to reach $22.7 billion, outstripping the forecasted $22.3 billion. Despite this, the company saw a reduction in gross profit and a 5% decline in core constant-currency earnings per share (EPS), which nonetheless stood at $2.12, surpassing the anticipated $2.03 per share.
On the international front, PepsiCo's performance remained strong, with organic revenue increasing by 5% or more across three of its four international segments. However, the performance in Pepsi Foods North America, primarily Frito-Lay, was less favorable, with a 2% decline in organic revenue, potentially indicating decreased consumer spending.
In terms of valuation, PepsiCo (PEP, Financial) displays a GF Value that suggests the stock is "Modestly Undervalued." Its current price ($144.42) falls below the GF Value estimate of $176.96. For more details, reference the GF Value of PepsiCo.
Key financial metrics for PepsiCo include a price-to-earnings (PE) ratio of 21.24, price-to-book (PB) ratio of 10.79, and price-to-sales (PS) ratio of 2.2. These figures are close to their respective 5-year and 10-year lows, indicating a potentially attractive valuation opportunity for investors. Additionally, the company boasts a strong Altman Z-Score of 3.58, which suggests financial stability.
Looking forward, PepsiCo anticipates a low-single-digit increase in organic revenue alongside flat EPS growth in 2025. Notably, PepsiCo’s dividend yield is currently at a high of 4.3% due to recent share price declines, presenting potentially favorable returns to dividend-seeking investors.
