Pepsico's (PEP.US) results topped analysts' expectations for the third consecutive quarter. Along with the successful results, the company raised its annual forecast. Shares gained 2% before the open:
Revenue: $21.97 bln vs. $20.84 bln forecasts
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- Pepsico raised its forecast for annual revenue growth and earnings per share by 2% to 12 and 10%, respectively. Annual earnings per share (EPS) is forecast to be $6.73;
- Consumers are shifting their spending away from durable goods where analysts expect a bigger slowdown to consumer goods, benefiting the company's stock. This phenomenon was also previously reported by Wal Mart (WMT.US), through which JP Morgan analysts expected Pepsico's performance to improve. The report also showed that the condition of American consumers remains healthy;
- The company's Frito-Lay North America and Quaker Food North America snacks division registered growth of 20% and 15%, respectively, despite a decline in total product sales. The good results show that Pepsico has successfully passed on costs to customers, the price increase reflected the company's declining total purchase volume. At the same time, the company registered 4% higher demand for PepsiCo Beverages products;
- The company said production costs continued to rise in the second half of the year and it intends to focus on reducing them by, among other things, using smaller package sizes.
Shares of Coca Cola (KO.US) are also gaining on the wave of Pepsi's strong performance; the company will present financial results a little later on October 25.
Pepsico (PEP.US) shares, D1 interval. The company's shares have fallen below the 200 SMA (red line) three times since the beginning of the year, and each time rebounded above it after surprisingly good results. A similar situation may also occur this time, the company shows resilience, demand for Pepsi's flagship products remains strong despite high inflation. Bulls can elevator the price above the 50 and 200 session averages, the stock has a chance to get back above $170 per share. Statistically, companies with an established global presence and brand name like Pepsico and CocaCola should fare better in a recessionary environment, making them a 'safe haven' for investors in the context of an economic slowdown. Source: xStation5
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