Retail Stock to Watch: PepsiCo, Inc. (NASDAQ: PEP)

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PepsiCo, Inc. (NASDAQ: PEP) stock rose over 1% on April 16th, 2021 (as of 12:36:39 UTC-4 · USD; Source: Google finance) after the company posted better than expected results for the first quarter of FY 21. Net income attributable to the company rose to $1.71 billion from $1.34 billion, a year earlier. The company expects organic revenue growth to pick up pace in the second quarter, betting on higher soda sales from restaurants that are gradually reopening following the speedy rollout of coronavirus vaccines. Sales of snacks under the company’s Frito-Lay North America unit grew 4% in the quarter ended March 20, while those of sodas and other beverages grew 5% in North America, its biggest market. Further, the company expects the North American beverage business to “perform well” and the snack unit to “remain resilient.” The company, however, stuck to its organic revenue growth and earnings forecast for the year.

Moreover, for fiscal 2021, the company expects a mid-single-digit increase in organic revenue, a high-single-digit increase in core constant currency EPS, a core annual effective tax rate of approximately 21 percent; and total cash returns to shareholders of approximately $5.9 billion, comprised of dividends of approximately $5.8 billion and share repurchases of $106 million. The company has completed the share repurchase activity and do not expect to repurchase any additional shares for the balance of 2021. The Company continues to expect a 1-percentage-point foreign exchange translation tailwind to benefit reported net revenue and core EPS growth based on current market consensus rates.

Meanwhile, in terms of ’21, there is certainly higher input inflation, but it’s been factored into the ’21 guidance, notably, in terms of agricultural and packaging. In addition to that, the company has also factored in the higher freight and transportation costs that the company is experiencing out there right now. Overall, in Q1, of the 140 basis point decline, about 100 basis points of that came out of the international M&A, and about 30 basis points came out of the pressures that we experienced due to the winter storm in the middle of the country.

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