PepsiCo Inc. (PEP, Financial) reported its second-quarter results on July 11, posting improved sales and earnings.
Adjusted earnings per share of $1.50 beat the estimates of $1.40. The company posted total earnings of $2.11 billion for the quarter, up from $2.01 billion in the comparable quarter of 2016.
Quarterly revenue of $15.71 billion also beat expectations of $15.6 billion.
Despite the beat, PepsiCo shares slid 0.8% to $113.33 in Tuesday morning trading. It closed at $114.27 on Monday.
The snack and beverage company attributed its improved sales performance to implementing higher prices to offset lower demand in North America and the sale of its stake in British bottling company Britvic PLC (LSE:BVIC, Financial). With a trend toward healthier lifestyles prevailing among consumers, PepsiCo has been negatively impacted by declining demand for its snack and drink products.
Despite concerns in regard to the impact of increased prices, sales in the Frito-Lay segment increased 3% while the North American beverage segment witnessed a 2% sales increase, both on flat volume growth. The Quaker Foods segment saw sales decline 1%, but volume remained steady.
The company’s beverage volumes declined 2% during the quarter while total food and snacks volume grew 2%.
PepsiCo Chairman and CEO Indra Nooyi said the quarterly results were in line with the company’s expectations and remain on track to meet guidance for the year.
“The power and durability of our brand and product portfolios, strong marketplace execution and the balance of our geographic footprint enabled us to deliver strong operating results in the midst of pockets of macroeconomic challenges and increasingly dynamic retail and consumer landscapes,” Nooyi said.
Since management anticipates the impact of foreign exchange rates to be lighter, PepsiCo raised its adjusted EPS guidance for full-year 2017 from $5.09 to $5.13.
It also expects to generate $10 billion in operating cash flow and $7 billion in free cash flow. Net capital spending is expected to be $3 billion for the year.
The company plans to distribute approximately $4.5 billion in dividend payments and $2 billion in share repurchases during the year.
Among the gurus invested in PepsiCo, Donald Yacktman (Trades, Portfolio) has the largest position with 0.6% of outstanding shares. A total of 26 gurus own the stock.
Disclosure: I do not own any stocks mentioned in the article.
