PepsiCo (PEP) earnings preview: Snacks business to fuel growth in Q4

PepsiCo Inc. (NASDAQ: PEP) is scheduled to report fourth quarter 2019 earnings results on Thursday, February 13, before the market opens. Analysts have forecast earnings of $1.44 per share which compares to earnings of $1.49 per share reported a year ago. Sales is expected to increase over 3% to $20.2 billion.

The snacks business has consistently delivered strong growth over the past quarters and this momentum is expected to continue in the fourth quarter as well. Last quarter, the company saw revenue increases across all its segments with solid growth in emerging markets.

PepsiCo is investing significantly in its business and the company continues to revamp its product portfolio in order to appeal to changing consumer tastes. In December, the company announced the acquisition of BFY Brands, the maker of PopCorners snacks. This deal is expected to help broaden PepsiCo’s snacking portfolio.

However, costs related to the ongoing investments as well as negative impacts from foreign currency are likely to hurt the quarterly results.

Also see: PepsiCo Q3 2019 Earnings Conference Call Transcript

In the third quarter of 2019, PepsiCo beat revenue and earnings estimates. Revenues grew 4% to $17.1 billion while adjusted EPS dipped 1% to $1.56. The company posted revenue increases across all its divisions both on a reported and organic basis.

PepsiCo expects to meet or exceed its full-year 2019 organic revenue growth target of 4%. The company also expects core EPS to be $5.50, down 3% from 2018. Core constant currency EPS is expected to decline by approx. 1%.

PepsiCo’s shares have gained 29% over the past one year and 10% over the past three months.

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