Consumer goods giant PepsiCo Inc. PEP reported strong second-quarter earnings before the opening bell on Tuesday.
The New York-based company, which produces a variety of beverages and snacks under the Pepsi, Lays, Tropicana, Quaker and Gatorade brands, among others, posted adjusted earnings of $1.54 per share, edging past Refinitiv’s estimates of $1.50. Revenue grew 2.2% from the prior-year quarter to $16.44 billion, topping expectations of $16.43 billion. Organic revenue was up 4.5%, surpassing the 4.4% increase analysts were anticipating.
In a statement, Chairman and CEO Ramon Laguarta said foreign exchange fluctuations negatively impacted revenue during the quarter, while healthier snacks and sparkling water helped fuel sales growth.
“We are also pleased with the progress on our priorities to make PepsiCo a faster, stronger and better company by building new capabilities, strengthening our brands, adding capacity to grow and transforming our culture,” he said.
By segment, Frito-Lay North America was the strongest performer with 5% organic sales growth as consumers have embraced its line of healthy snacks. Revenue in the Quaker Foods North America division grew 3%, marking its strongest quarterly performance in three years. The North American beverages business, which was boosted by its Starbucks coffee drinks and sparkling water, posted organic sales growth of 2%.
Revenue in the company’s Latin America segment grew 10% organically, while the Europe and Sub-Saharan Africa and Asia, Middle East and North Africa businesses both saw organic sales increase 5%.
PepsiCo also reaffirmed its guidance for the year. It anticipates 4% organic revenue growth and adjusted earnings per share to decline 1%.
“Our performance for the first half and the progress we are making on our strategic priorities give us increased confidence in achieving the 2019 financial targets we communicated earlier this year,” Laguarta said.
Following an initial pop in early trading, PepsiCo’s shares fell after the market opened. With a market cap of $184.04 billion, shares were down 1.03% at $131.19 on Tuesday morning. GuruFocus estimates the stock has gained 20% year to date.
According to the GuruFocus Industry Overview page, PepsiCo is the second-largest company in the nonalcoholic beverages sector, behind Coca-Cola Co. KO. Other leaders in the space are Keurig Dr Pepper Inc. KDP and Monster Beverage Corp. MNST.
Several guru investors currently see value in the stock. Of the gurus invested in PepsiCo as of the end of the first quarter, Pioneer Investments (Trades, Portfolio) has the largest position with 0.63% of outstanding shares. Other top guru shareholders include Yacktman Asset Management (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Hotchkis & Wiley, Diamond Hill Capital (Trades, Portfolio), David Carlson (Trades, Portfolio), the T Rowe Price Equity Income Fund (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Charles Brandes (Trades, Portfolio).
Disclsosure: No positions.
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