Wednesday, February 10, 2010

Pepsico Inc. (NYSE: PEP): Q4 Earnings Preview 2009

Pepsico Inc. (NYSE: PEP) is scheduled to release its fiscal fourth-quarter 2009 financial results before the market open on Thursday, February 11, 2010 Analysts, on average, expect the company to report earnings of 91 cents a share on revenue of $13.27 billion. In the year ago period, the company posted earnings of 88 per share on revenue of $12.73 billion.

PepsiCo, Inc. manufactures, markets, and sells various snacks, carbonated and non-carbonated beverages, and foods worldwide. Its PepsiCo Americas Foods unit offers salty and sweet snacks comprising Lay's potato chips, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla chips, branded dips, Fritos corn chips, Ruffles potato chips, Quaker Chewy granola bars, SunChips multigrain snacks, Rold Gold pretzels, Santitas tortilla chips, Frito-Lay nuts, Grandma's cookies, Gamesa cookies, Munchies snack mix, Funyuns onion flavored rings, Quaker Quakes corn and rice snacks, Sabritas snacks, Miss Vickie's potato chips, Stacy’s pita chips, Smartfood popcorn, Chester's fries, and branded crackers.

In the preceding third quarter, Purchase, New York-based company reported a 9% year-over-year growth in profit, helped by productivity and cost control across its businesses, despite a marginal 1.5% decline in revenues. Net income totaled $1.72 billion or $1.09 per share for the third quarter, higher than $1.58 billion or $0.99 per share in the prior-year quarter. Excluding mark-to-market net gains/losses as well as PBG/PAS merger costs, core earnings for the quarter edged up to $1.71 billion or $1.08 per share from $1.69 billion or $1.06 per share in the year-ago quarter. Core constant currency earnings per share were up 8%. Net revenue for the quarter slipped to $11.08 billion from $11.24 billion reported in the same quarter last year. Analysts, on average, expected the company to report earnings $1.03 per share on revenue of $11.25 billion.

In December, food and beverage giant said it has started increasing investments in targeted areas that will support improved growth and profitability in 2010 and beyond.

For fiscal 2009, PepsiCo expects constant currency net revenue to be up about 5% and earnings per share to increase about 5% to 6%, in core constant currency, off of its fiscal 2008 core earnings of $3.68 per share. Earlier, the company estimated mid-to high-single-digit constant currency growth for both net revenue and core earnings per share over last year.

For fiscal 2010, PepsiCo expects 11% to 13% growth for core constant currency earnings per share off of expected fiscal 2009 core earnings per share.

The company is poised to benefit from a rebound in consumer spending, strength of its food business, international growth and global economic stabilization.

The company's stock currently trades at a forward P/E (fye 27-Dec-10) of 14.44 and PEG Ratio (5 yr expected)of 1.62. In terms of stock performance, Pepsico shares have gained 15 percent over the past year.

Full Disclosure: None.

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