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Old 11-07-2019, 12:37 PM   #126
Mr. Wood
Supremacy Member
Join Date: Oct 2013
Posts: 9,824

PepsiCo (PEP) reported its second quarter results for fiscal 2019 this morning. Highlights from the release are below:
4.5% Constant-currency revenue growth versus the same quarter a year ago

-2.0% Constant-currency core EPS growth versus the same quarter a year ago
PepsiCo's CEO Ramon Laguarta had the following to say about the company's results:

"We are pleased with our results for the second quarter. While adverse foreign exchange translation negatively impacted our reported net revenue performance, our organic revenue growth was 4.5% in the quarter. We are also pleased with the progress on our priorities to make PepsiCo a faster, stronger and better company by building new capabilities, strengthening our brands, adding capacity to grow and transforming our culture. Our performance for the first half and the progress we are making on our strategic priorities give us increased confidence in achieving the 2019 financial targets we communicated earlier this year."

While PepsiCo's CEO is "pleased", we are less optimistic. As an established corporation in a mature industry, PepsiCo's rapid growth days are far behind it. The company's 4.5% constant-currency revenue growth is healthy in our view.

The company's -2.0% constant-currency adjusted EPS growth is what gives us pause, along with the expected slight decline in adjusted EPS for fiscal 2019. We expect PepsiCo to deliver growth during times of global prosperity.

We currently have PepsiCo rated as a hold. It is near sell territories as we expect weak total returns ahead due to the company's sluggish growth and high valuation relative to its history, partially offset by its generous dividend.
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