Beverage Giant PepsiCo Beats On Q3 Earnings, Raises FY23 EPS Outlook Again

PepsiCo Inc PEP reported third-quarter FY23 sales growth of 6.7% year-on-year to $23.45 billion, beating the analyst consensus estimate of $23.43 billion.

Net revenue from Frito-Lay North America increased 7% Y/Y, Quaker Foods North America rose 5%, and PepsiCo Beverages North America climbed 8%.

Latin America sales jumped 21% Y/Y, and Europe sales scaled 2%.

Gross profit increased 9.5% Y/Y to $12.7 billion, and the margin expanded 140 basis points Y/Y to 54.5%.

Operating margin expanded by 186 basis points to 17.1%, and operating income for the quarter increased 19.7% to $4 billion.

The company held $10.1 billion in cash and equivalents as of September 9, 2023. Operating cash flow for nine months totaled $7.63 billion.

Adjusted EPS of $2.25 beat the consensus estimate of $2.15. 

Chairman and CEO Ramon Laguarta, said "We believe that our businesses can continue to perform well in the coming years with category growth normalizing, as we have made numerous investments in our brands, manufacturing capacity, go-to-market systems, supply chain, technology, and people, to execute against our strategic framework and modernize our company. Therefore, we expect our full-year 2024 organic revenue and core constant currency EPS growth to be towards the upper end of our long-term targets as we advance towards our vision to become the global leader in beverages and convenient foods by winning with pep+."

Outlook: PepsiCo continues to expect FY23 organic revenue growth of 10%.

For FY23, the company now expects to deliver 13% core constant currency EPS growth (previously 12%).

PepsiCo raised its FY23 adjusted EPS outlook from $7.47 to $7.54 versus the consensus of $7.49.

The company continues to expect total cash returns to shareholders to be approximately $7.7 billion, consisting of dividends of $6.7 billion and share repurchases of $1.0 billion.

Price Action: PEP shares are trading higher by 2.22% at $164.94 in premarket on the last check Tuesday.