Ozempic and other weight-loss drugs didn’t hurt third-quarter results for PepsiCo (PEP).
The maker of Pepsi soda and Frito Lay snacks beat Wall Street’s earnings estimates on Tuesday, sending shares up 3% in premarket trading.
The company reported sales increases in all business areas except Africa/Middle East. Core earnings per share growth was 16% year-over-year, more than double revenue growth.
The earnings report
Net sales: +6.7% YoY to $22.3 billion vs. estimates of $23.38 billion
Frito-Lay North America Sales: +7% YoY to $5.95 billion vs. estimates of $5.96 billion
Quaker Foods North America Sales: +5% YoY to $747 million vs. estimates of $729.2 million
North America Drinks: +8% YoY to $7.16 billion vs. estimates of $6.98 billion
Sales Europe: +2% YoY to $3.7 billion vs. estimates of $3.87 billion
Sales Latin America: +21% YoY to $3 billion vs. estimates of $2.98 billion
Sales Africa/Middle East: -6% YoY to $1.61 billion versus estimates of $1.64 billion
Sales Asia Pacific: +4% YoY to $1.21 billion vs. estimates of $1.22 billion
Organic sales growth: +8.8% YoY vs estimates of +8.3%
Core EPS: +16% YoY to $2.25 versus estimates of $2.16
Core EPS Guide: +13% YoY versus previous forecast of 12% growth
Yahoo Finance Hot Take
PepsiCo’s normally stable Eddie shares have fallen about 12% in the past three months (along with selloffs in other food stocks), while Wall Street has been abuzz with rumors about the impact on the industry of the proliferation of new weight-loss programs such as drugs Ozempic.
However, PepsiCo’s results and the CEO’s earnings day commentary throw a hole in the thesis behind the selloff.
In addition to raising its full-year profit outlook, the company said revenue and profit growth in 2024 would be at the higher end of its longer-term targets. CEO Ramon Laguarta cited further “strength” and “resilience” in PepsiCo’s product categories.
The story goes on
Packages of potato chips from Lay’s, owned by PepsiCo. (Igor Golovniov/SOPA Images/LightRocket via Getty Images)
The sentiment is similar to what Constellation Brands CEO Bill Newlands told Yahoo Finance last week after the results – none of his customer surveys show a decreased appetite for beer due to Ozempic (video above).
If the normally cautious PepsiCo had thought Ozempic would reduce the size of its profits, investors would have received a slimmed-down outlook today. This is not a management team that likes to negatively surprise investors.
The fact that they didn’t is telling.
We’ll hear more about PepsiCo’s prospects today from longtime Executive Vice Chairman and CFO Hugh Johnston on Yahoo Finance Live at 9:15 a.m. Tune in to our homepage, YouTube, Roku and the Yahoo Finance app.
Brian Sozzi is Editor-in-Chief of Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected].
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