PepsiCo CFO on Q4 results: ‘we have a winning formula’

By:
on Feb 9, 2023
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  • PepsiCo issued weaker than expected guidance for the full year today.
  • CFO Hugh Johnston discussed the Q4 results and guidance on CNBC.
  • PepsiCo stock is up on a 10% lift in dividend and stock buyback plans.

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Shares of PepsiCo Inc (NASDAQ: PEP) are trading down this morning even through the beverage giant issued weaker-than-expected guidance for the full year.

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Why is PepsiCo stock up today?

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The stock is keeping resilient on the back of a strong Q4.

Commodity prices remained high this quarter but PepsiCo was able to easily navigate with price hikes that resulted in a boost to operating profit in PepsiCo beverages North America and Frito-Lay. On CNBC’s “Squawk Box”, CFO Hugh Johnston said:

Inflation didn’t moderate in the quarter. Our pricing finally caught up with it. Investments we’ve made in our brands and the fact that consumers are still pretty healthy has caused demand to continue. We have a winning formula right now.

PepsiCo’s guidance for the future

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For the full year, though, PepsiCo is calling for $7.20 of per-share earnings. In comparison, analysts were at a slightly higher $7.27.

PepsiCo also raised its annualised dividend by 10% to $5.06 a share on Thursday and revealed plans of buying back about $1.0 billion worth of its stock. The finance chief added:

Our premium and value products are doing well. Billion dollars will offset employee stock compensation and other potential dilution. But the biggest piece of cash return is dividends. We’ve grown it now 51 straight years.

Nonetheless, PepsiCo stock is currently down 3.0% year-to-date.

PepsiCo Q4 financial highlights

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  • Earned $518 million versus the year-ago $1.32 billion
  • Per-share earnings also tanked from 95 cents to 37 cents
  • Adjusted EPS printed at $1.67 as per the earnings press release
  • Revenue went up about 11% year-on-year to $27.99 billion
  • Consensus was $1.65 of adjusted EPS on $26.82 billion revenue

Wall Street currently recommends buying PepsiCo stock and sees upside in it to $190 – up about 10% from here.

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