Shares of PepsiCo (NASDAQ:PEP) fell in pre-market trading after the company reported earnings for its second quarter of FY24 and its revenues fell short of estimates. The snack and beverage giant posted Q2 revenues of $22.5 billion, up by 0.8% year-over-year but falling short of consensus estimates of $22.6 billion.
The company’s adjusted earnings came in at $2.28 per share, beating analysts’ consensus estimate of $2.16 per share.
PEP’s Revenue Breakdown
PepsiCo’s organic revenue rose 1.9% in the quarter, driven by its international business. However, domestic sales were hit due to product recalls and declining demand. The company’s management noted that value-conscious consumers, reacting to years of price increases, are buying fewer chips or opting for cheaper private-label alternatives.
Indeed, the share of PepsiCo’s North American business as a part of its total Q2 revenues of $22.5 billion has reduced to less than 59% from 59.7% in the same period last year.
PEP’s FY24 Outlook
Looking forward, management narrowed its FY24 revenue outlook and now expects its organic revenues to rise by 4% year-over-year compared to its previous forecast of at least 4% growth. PEP anticipates that core earnings per share will increase by 8% on a constant currency basis, implying core earnings of $8.15 per share, a 7% rise year-over-year.
Is PEP a Buy, Sell, or Hold?
Analysts remain cautiously optimistic about PEP stock, with a Moderate Buy consensus rating based on 10 Buys and six Holds. Over the past year, PEP has declined by more than 8%, and the average PEP price target of $187.40 implies an upside potential of 14.5% from current levels. However, these analyst ratings are likely to change following PEP’s Q1 results today.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
