Pepsico Inc. (NYSE: PEP): Q1 Earnings Preview 2011

Pepsico Inc. (NYSE: PEP) is scheduled to release its first-quarter earnings before the opening bell on Thursday, April 28, 2011. Analysts, on average, expect the company to report earnings of 73 cents a share on revenue of $11.71 billion. In the year ago period, the company posted earnings of 76 cents per share on revenue of $9.37 billion.

PepsiCo, Inc. manufactures, markets, and sells various snacks, carbonated and non-carbonated beverages, and foods worldwide. The Company’s portfolio includes oat, rice and grain-based snacks, as well as carbonated and non-carbonated beverages, in over 200 countries.

At its last earnings call in January, the company warned that rising prices of commodities—whether corn for Doritos or crude oil used to make plastic bottles—coupled with a hazy economic outlook, particularly in developed markets, will constrain earnings in the coming years. PepsiCo's sizable food business makes it much more exposed to commodities.

In the preceding fourth quarter, Purchase, New York-based company's net income was $1.37 billion, or 85 cents per share, compared to $1.43 billion, or 90 cents per share, in the prior-year quarter. On an adjusted basis, the company earned $1.05 in the fourth quarter. Revenue jumped 37 percent to $18.16 billion from $13.30 billion Analysts, on average, expected the company to report earnings of $1.04 per share on revenue of $17.62 billion.

Recently, PepsiCo reaffirmed that it still expects fiscal year 2011 earnings per share growth of 7 to 8 percent from core earnings per share of $4.13 in 2010. PepsiCo expects fiscal 2011 organic net revenue growth, on a core constant currency basis and excluding the impact of the acquisition of Wimm-Bill-Dann Foods OJSC, in line with its long-term goal of mid-single-digit core constant currency net revenue growth from pro forma net revenue of $59.6 billion in 2010. 

Industrywide sales of carbonated soft drinks had been falling in the United States even before the recession slammed the brakes on consumer spending. Some consumers, taking heed of growing awareness of nutritional health, opted for drinks such as bottled water, juice and tea. 

Beverage Digest recently reported that Atlanta-based Coca-Cola (NYSE: KO)  sold nearly 927 million cases of its diet offering in 2010, to reach a market share of 9.9% — ahead of PepsiCo’s PEP -0.16%   namesake beverage, which moved 891.5 million cases and held a market share of 9.5%. Regular Coke held firm to its dominant No. 1 position with sales of 1.59 billion cases and a share of 17%.

On the bright side, a strong new product pipeline, robust international sales, on-going manufacturing productivity initiatives, and an active stock program are all positives for PepsiCo. PepsiCo International too is reporting growing revenues and profits across many regions, especially developing markets. Asia Pacific markets, such as China and India, are leading the way with double-digit volume increases in snacks and beverages. The Middle East and Africa region is also seeing excellent results from countries such as Turkey and Egypt.The company has been investing significantlyincountries like China, Mexico and Russia over the past few years.

PepsiCo’s heightened emphasis on nutritious convenience foods puts the company in position to grab market share at a time when consumers are becoming increasingly health-conscious. The market share gains from increased focus on nutritious food offerings could increase profitability for PepsiCo’s Quaker Foods, Tropicana, and Gatorade product lines. New distribution of healthy food products in China and a low-calorie fruit puree set to test U.S. markets could spark market share gains for the company. A new Gatorade product line expected for Spring 2011 could also advance the company’s market penetration.

PepsiCo is now getting ready to slim down this summer by offering a cola with 40 percent of the calories of its Pepsi-Cola soft drink. The new drink, called Pepsi Next, will have 40 calories per 8-ounce serving, or 60 calories per 12-ounce can, according to Beverage Digest. Regular Pepsi has 100 calories per 8-ounce serving and 150 calories per 12-ounce can. Diet Pepsi has no calories. Beverage Digest, citing sources, said the new drink may be launched in July or August.

Also, the company has started to introduce a new line of healthy food options in China, where reports of chronic illnesses have been increasing. As consumers become more health-conscious, Pepsi and some of its competitors in the global packaged food market are introducing foods that include traditional Chinese folk medicine ingredients like wolfberry plants, chrysanthemum teas and tremella. 

The company's stock currently trades at a forward P/E (fye Dec 25, 2012) of 13.82 and PEG ratio (5 yr expected) of 1.85. In terms of stock performance, PepsiCo shares have gained nearly 3 percent since the beginning of the year.

Full Disclosure: None.

Pepsico Inc. (NYSE: PEP): Q4 Earnings Preview 2010

Pepsico Inc. (NYSE: PEP) is scheduled to release its fourth-quarter earnings before the market open on Thursday, February 10, 2011. Analysts, on average, expect the company to report earnings of $1.04 a share on revenue of $17.64 billion. In the year ago period, the company posted earnings of 90 per share on revenue of $13.30 billion.

PepsiCo, Inc. manufactures, markets, and sells various snacks, carbonated and non-carbonated beverages, and foods worldwide. The Company’s portfolio includes oat, rice and grain-based snacks, as well as carbonated and non-carbonated beverages, in over 200 countries.

In the preceding third quarter, Purchase, New York-based company's net income was $1.92 billion, or $1.19 a share, compared to $1.72 billion, or $1.09 a share, in the year-ago quarter. On an adjusted basis, the company earned $1.22 in the latest quarter. Revenue jumped 40% to $15.51 billion from $11.08 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $1.22 per share on revenue of $15.36 billion.

At its last earnings call in October, the company said that for fiscal 2010 it is targeting an 11 to 12 percent growth rate for core constant currency EPS from its fiscal 2009 core EPS of $3.71, which is within the previous guidance range of 11 to 13 percent. Based on current spot rates, foreign exchange translation would represent a one percentage point unfavorable impact on the company's full-year, core EPS. As a result, growth in core EPS for the year is expected to be in the 10 to 11 percent range.

Industrywide sales of carbonated soft drinks had been falling in the United States even before the recession slammed the brakes on consumer spending. Some consumers, taking heed of growing awareness of nutritional health, opted for drinks such as bottled water, juice and tea. 

On the bright side, a strong new product pipeline, robust international sales, on-going manufacturing productivity initiatives, and an active stock program are all positives for PepsiCo. PepsiCo International too is reporting growing revenues and profits across many regions, especially developing markets. Asia Pacific markets, such as China and India, are leading the way with double-digit volume increases in snacks and beverages. The Middle East and Africa region is also seeing excellent results from countries such as Turkey and Egypt.The company has been investing significantlyincountries likeChina, Mexico and Russia over the past few years.

PepsiCo’s heightened emphasis on nutritious convenience foods puts the company in position to grab market share at a time when consumers are becoming increasingly health-conscious. The market share gains from increased focus on nutritious food offerings could increase profitability for PepsiCo’s Quaker Foods, Tropicana, and Gatorade product lines. New distribution of healthy food products in China and a low-calorie fruit puree set to test U.S. markets could spark market share gains for the company. A new Gatorade product line expected for Spring 2011 could also advance the company’s market penetration.

Pepsi has started to introduce a new line of healthy food options in China, where reports of chronic illnesses have been increasing. As consumers become more health-conscious, Pepsi and some of its competitors in the global packaged food market are introducing foods that include traditional Chinese folk medicine ingredients like wolfberry plants, chrysanthemum teas and tremella. Between 2005 and 2009 the wellness foods and beverages market in China increased by 28%, reaching $1.5 billion in 2009. Pepsi now plans to continue its expansion into China with a $2.5 billion investment over the next 3 years. In October last year, it launched Quaker Herbal Oatmealin flavors such as wolfberry and tremella, a fungus considered in China to have therapeutic properties. 

As a part of its strategy to penetrate the market for nutritious convenience foods, Pepsi will soon begin distributing an 80-calorie fruit puree called Tropolis (marketed as a snack rather than a beverage) in test markets through its Tropicana division. The new product could piggyback success of PepsiCo’s Naked Juice smoothie line (for which a bottle typically contains 200 to 400 calories). Pepsi will market the product in apple, grape and cherry flavors (at $2.49 to $3.49 for a 4-pack) to mothers and children. The company reportedly worked closely with its target audience to develop the product, and has high hopes for its success.

Recently, PepsiCo Inc. said that it completed its $3.8 billion acquisition of a majority stake in Wimm-Bill-Dann Foods, a Russian company that produces dairy products, juices, mineral water and baby food. The company said the acquisition of about 66 percent of outstanding shares increases its stake in Wimm-Bill-Dann to about 77 percent. It expects to make an offer on or before March 11 for all remaining shares. PepsiCo said the deal makes it the largest food-and-beverage business in Russia and strengthens its position in the fast-growing Eastern European and Central Asian markets.

Full Disclosure: None.

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.