Why PepsiCo Shares Are Surging Today

PepsiCo Inc PEP reported second-quarter FY23 sales growth of 10.4% year-on-year to $22.32 billion, beating the analyst consensus of $21.73 billion.

Net revenue from Frito-Lay North America increased 14% Y/Y, Quaker Foods North America rose 1%, and PepsiCo Beverages North America climbed 10%.

Latin America sales jumped 18% Y/Y, and Europe sales scaled 13%.

Gross profit increased 12.9% Y/Y to $12.2 billion, and the profit margin expanded 120 basis points Y/Y to 54.6%.

Operating margin expanded by 610 basis points to 16.4%, and operating income for the quarter rocketed 76% to $3.7 billion.

The company held $6.2 billion in cash and equivalents as of June 17, 2023. Net cash provided by operating activities for six months totaled $2.01 billion.

Adjusted EPS of $2.09 beat the analyst consensus of $1.96.

“Moving forward, we will look to elevate our focus on productivity initiatives to further support investments in innovation, brand building, digitalization, and sustainability to win in the marketplace and fortify our businesses for the long-term,” said CEO Ramon Laguarta.

Outlook: PepsiCo raised the FY23 organic revenue growth outlook to 10% (previous outlook 8%).

PepsiCo sees 12% core constant currency EPS growth (prior 9%).

The assumption implies 2023 core EPS of $7.47 (previously $7.27) compared to 2022 core EPS of $6.79 and consensus of $7.32.

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

Price Action: PEP shares are trading higher by 2.23% at $187.25 in premarket on the last check Thursday.