PepsiCo stock climbs to a record high after market-beating Q2 results

PepsiCo Inc. (NASDAQ: PEP) said on Tuesday its profit and revenue came in significantly better than Wall Street estimates for the fiscal second quarter and raised its guidance for full-year earnings. Shares of the company jumped a little under 3% on Tuesday morning to hit a record $153.70.

Financial performance

PepsiCo reported $2.36 billion of net income in the second quarter that translates to $1.70 per share. In Q2 last year, its net income stood at $1.65 billion or $1.18 per share. Adjusted for one-time items, the food and beverage company earned $1.72 in the recent quarter.

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PepsiCo valued its revenue at $19.22 billion in the second quarter that represents a 20.5% annualised growth. According to FactSet, experts had forecast the company to post $17.96 billion of revenue and $1.53 of adjusted EPS. In May, UBS raised its price target on PepsiCo to $165.

Revenue from business units and full-year guidance

In North America, PepsiCo’s revenue from beverages and Frito Lay climbed by 23.9% and 6.5%, respectively. Quaker Foods revenue tanked 13.4% in Q2 to miss expectations. The American multinational expects $3.15 billion of restructuring charges versus $2.5 billion predicted earlier. Its five-year productivity plan through 2026 is forecast to deliver annual savings worth at least $1 billion.

For the full financial year, PepsiCo now expects a 6% growth in its organic revenue and an 11% increase in EPS (constant currency). Analysts are calling for a much lower 7.2% growth in full-year earnings instead.

CFO Hugh Johnston’s remarks on CNBC’s “Squawk Box”

Commenting on the quarterly results, CFO Hugh Johnston said on CNBC’s “Squawk Box”:

“A lot of the things we did through the pandemic, continuing to invest in the business, are now paying dividends as mobility has increased and consumers are really getting out more.”

Lauding incredible performance in North America, Johnston highlighted that ‘terrific innovation’ was helping with securing a greater market share and that the company was “performing well versus competition”.