Pepsi Stock Earnings: PEP sheds opening bounce early Thursday

PepsiCo (PEP) stock initially surged up to $186.62 or 1.6% soon after Thursday's open after the food and soft drink purveyor easily bested Wall Street consensus for the second quarter when it released results during the premarket. A half hour into the session, however, PEP is back down to a more meager gain of 0.3%. It seems like bulls saw this as a good spot for profit-taking. PepsiCo stock had jumped 2.1% in the premarket when results were announced.

PepsiCo reported adjusted earnings per share (EPS) of $2.09 or 13 cents ahead of analyst expectations. Revenue of $22.32 billion rose more than 10% YoY and beat consensus by nearly $600 million.

PepsiCo earnings news: Guidance raised for second half

Volumes fell for both convenient foods and beverages in a number of locales and segments throughout the business, but Pepsi was able to overpower these obstacles through pricing power.

“We are very pleased with our performance for the second quarter as our business momentum remains strong. As a result, we now expect our full-year organic revenue to increase 10 percent (previously 8 percent) and our core constant currency EPS to increase 12 percent (previously 9 percent),” said Chairman and CEO Ramon Laguarta. 

Volumes fell 5% and 4.5% on an annual basis at the North American operations of both the Quaker Foods and PepsiCo Beverages, respectively. The Africa, Middle East and South Asia division also performed poorly. On the other hand, European convenient foods and beverages in the Asia/Pacific division both witnessed growth. Europe as a whole saw profits rise 46% YoY, making it the best performing geography by far.

Management reiterated its expectation for $6.7 billion in dividends for 2023 and share repurchases totaling $1 billion. Additionally, full-year guidance for core EPS was raised from $7.27 to $7.47. This would be a 10% gain from 2022’s $6.79.

PepsiCo stock chart

PepsiCo stock has recently turned over bearishly on the Moving Average Convergence Divergence (MACD) indicator, and the 9-day Simple Moving Average (SMA) is trading below the 21-day average. The second-quarter earnings spike may be enough to turn both indicators bullish however.

If PEP stock bulls decide to build on the quarter’s solid beat-and-raise performance, then recent range highs at $188 and $196.88 will be the focus. 

PepsiCo stock has been in an incline for most of the time since the March 2020 low of the pandemic. The current bottom trendline provides support near $176.50, which is near enough to make bulls more courageous in entering at the current price level. 

PEP stock daily chart