PepsiCo became one of the first companies that released its earnings in the new US reporting season. And market participants responded positively to the figures. As a result, the stock has experienced a nearly 2.5% increase. Let’s delve into how PepsiCo achieved such results in these unstable times and whether adding a few company shares to a portfolio is a wise move.
To begin with, let's examine the growth that PepsiCo stock has demonstrated this year – not much at all, standing at around 5% for the first half of the year. Also, if you are looking for assets showing more impressive results in 2023, you can use stock screener. This tool enables you to get lists of stocks based on your own filters and criteria.
PepsiCo’s revenue and earnings have surpassed analyst forecasts – $22.3 billion against $21.7 billion, and $1.99 earnings per share versus the estimated $1.96 a share, respectively. Despite the rising prices for the company’s products, sales have also increased. However, the volumes went downhill. All while, PepsiCo has raised its future earnings forecasts.
While these results are not the best, they tell us about the loyalty of PepsiCo's customers. If you enjoy Pepsi or Doritos, you’ll grab them from a shelf in a supermarket (albeit looking at prices and sighing heavily). The CEO of PepsiCo defines its products as “affordable luxury” – enjoyable unnecessary spending.
Diversification has proven to be a significant advantage for this beverage and snacks manufacturer. Pepsi, Gatorade, Lipton, Mountain Dew, Doritos, Cheetos, Lay’s all belong to the PepsiCo family. Plus, the company is expanding into healthier food options with less-known brands like SunChips and Off The Eaten.
Among the other significant factors contributing to growth, there is a relatively low unemployment rate in developed and emerging countries. This allows PepsiCo to maintain sales at an affordable level. Additionally, it's essential to consider not only the 2023 results but also the broader period. As seen, PepsiCo's stock has outperformed the S&P 500 index over the past five years.
PepsiCo is a legendary name. Even this fact alone is enough to generate dozens of profit. The financial capabilities of the company give an opportunity to pay dividends for many years in a row.
Following the release of the strong financial report, lots of analyst departments have adjusted their price targets: for example, Deutsche Bank raised its target from $193 to $195, Goldman Sachs – from $208 to $212, RBC – from $178 to $180, and Wedbush – from $200 to $206. The consensus forecast for PepsiCo stock stands at a +7.5% growth in the next 12 months. Not too much, but maybe that’s what stability looks like.
Remember, before making any trade, it's crucial to conduct your own analysis. It's a more intricate process than simply relying on analyst opinions while holding a can of Pepsi in your hand, but it's the only way to achieve success.