Understanding PepsiCo (PEP) Reliance on International Revenue

Did you analyze how PepsiCo (PEP) fared in its international operations for the quarter ending March 2024? Given the widespread global presence of this food and beverage company, scrutinizing the trends in international revenues becomes imperative to assess its financial strength and future growth possibilities.

The global economy today is deeply interlinked, making a company's engagement with international markets a critical factor in determining its financial success and growth path. It has become essential for investors to comprehend how much a company relies on these foreign markets, as this understanding reveals the firm's potential for consistent earnings, its capacity to harness different economic cycles, and its overall growth prospects.

Participation in global economies acts as a defense against economic difficulties at home and a pathway to more rapidly developing economies. However, it also comes with the complexities of dealing with fluctuating currencies, geopolitical risks and different market dynamics.

Upon examining PEP's recent quarterly performance, we noticed several interesting patterns in the revenue generated from its international segments, which are commonly analyzed and observed by Wall Street experts.

The company's total revenue for the quarter amounted to $18.25 billion, marking an increase of 2.3% from the year-ago quarter. We will next turn our attention to dissecting PEP's international revenue to get a clearer picture of how significant its operations are outside its main base.

A Closer Look at PEP's Revenue Streams Abroad

Of the total revenue, $1.94 billion came from Africa, Middle East and South Asia during the last fiscal quarter, accounting for 10.6%. This represented a surprise of +2.29% as analysts had expected the region to contribute $1.89 billion to the total revenue. In comparison, the region contributed $1.62 billion, or 5.8%, and $2.01 billion, or 11.3%, to total revenue in the previous and year-ago quarters, respectively.

During the quarter, Latin America contributed $3.97 billion in revenue, making up 21.7% of the total revenue. When compared to the consensus estimate of $3.85 billion, this meant a surprise of +2.94%. Looking back, Latin America contributed $3.06 billion, or 11%, in the previous quarter, and $3.37 billion, or 18.9%, in the same quarter of the previous year.

Asia Pacific, Australia and New Zealand and China Region generated $1.45 billion in revenues for the company in the last quarter, constituting 8.0% of the total. This represented a surprise of -5.17% compared to the $1.53 billion projected by Wall Street analysts. Comparatively, in the previous quarter, Asia Pacific, Australia and New Zealand and China Region accounted for $1.22 billion (4.4%), and in the year-ago quarter, it contributed $1.48 billion (8.3%) to the total revenue.

Europe accounted for 23.1% of the company's total revenue during the quarter, translating to $4.22 billion. Revenues from this region represented a surprise of -2.23%, with Wall Street analysts collectively expecting $4.31 billion. When compared to the preceding quarter and the same quarter in the previous year, Europe contributed $3.7 billion (13.3%) and $4.26 billion (23.9%) to the total revenue, respectively.

Anticipated Revenues in Overseas Markets

It is projected by analysts on Wall Street that PepsiCo will post revenues of $22.75 billion for the ongoing fiscal quarter, an increase of 1.9% from the year-ago quarter. The expected contributions from Africa, Middle East and South Asia, Latin America, Asia Pacific, Australia and New Zealand and China Region and Europe to this revenue are 6.7%, 13.6%, 5% and 15.5%, translating into $1.52 billion, $3.09 billion, $1.13 billion and $3.51 billion, respectively.

For the full year, a total revenue of $94.59 billion is expected for the company, reflecting an increase of 3.4% from the year before. The revenues from Africa, Middle East and South Asia, Latin America, Asia Pacific, Australia and New Zealand and China Region and Europe are expected to make up 6.5%, 13.5%, 5.2% and 14.7% of this total, corresponding to $6.17 billion, $12.76 billion, $4.9 billion and $13.91 billion respectively.

In Conclusion

The dependency of PepsiCo on global markets for its revenues presents a mix of potential gains and hazards. Thus, monitoring the trends in its overseas revenues can be a key indicator for predicting the firm's future performance.

In a world where international interdependencies and geopolitical conflicts are ever-increasing, Wall Street analysts closely monitor these trends for companies having international presence to adjust their earnings forecasts. Of course, there are several other factors, including a company's standing within its home borders, that influence analysts' earnings forecasts.

At Zacks, a company's changing earnings outlook is given considerable attention due to its proven, strong influence on a stock's price performance in the near term. The connection here is straightforward and positive: when earnings estimates are revised upward, the stock price generally follows suit, increasing as well.

Our proprietary stock rating tool, the Zacks Rank, with its externally validated exceptional track record, harnesses the power of earnings estimate revisions to serve as a dependable measure for anticipating the short-term price trends of stocks.

At the moment, PepsiCo has a Zacks Rank #3 (Hold), signifying that its performance may align with the overall market trend in the upcoming period. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

A Look at PepsiCo's Recent Stock Price Performance

The stock has witnessed an increase of 1% over the past month versus the Zacks S&P 500 composite's a decrease of 3.2%. In the same interval, the Zacks Consumer Staples sector, to which PepsiCo belongs, has registered a decrease of 0.2%. Over the past three months, the company's shares saw an increase of 2.9%, while the S&P 500 increased by 3.5%. In comparison, the sector experienced an increase of 2.7% during this timeframe.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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