PepsiCo Posts 3rd-Quarter Figures
- By Alberto Abaterusso
PepsiCo Inc. (PEP) released financial results for the third quarter of fiscal 2017 before market open on Oct. 4.
The company closed the third quarter with EPS of $1.48, beating expectations by four cents. The beat produced a 2.8% positive surprise. EPS for the quarter increased 5.7% from $1.40 in the comparable quarter of 2016.
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The intrinsic value of PEP
Quarterly revenue came in at $16.24 billion, missing expectations of $16.31 billion but increasing 1.3% year over year.
The company reported organic revenue growth of 1.7%, but foreign exchange translations had a negative impact.
Revenue in the Frito-Lay North America segment grew 3% year over year to $3.79 billion; Quaker Foods North America's revenue increased 1% to $578 million; Latin America revenue was $1.87 billion (up 6% year over year); the North America Beverages segment's revenue decreased 3% year over year to $5.33 billion; revenue from the Europe Sub-Saharan Africa segment was $3.1 billion (up 8% year over year) and revenue from the Asia, Middle East and North Africa segment declined 4% to $1.57 billion.
PepsiCo also reported year-over-year increases in the operating profits of Frito-Lay North America segment (up 5% to $1.208 billion), Europe Sub-Saharan Africa segment (up 12% to $436 million) and the Latin America segment (up 14% to $281 million). The operating profit of the North America Beverages segment declined 10% year over year to $817 million.
Concerning margins, PepsiCo reported a 16.5% increase in the gross profit margin to 54.64% of net sales, and a 4.72% increase year over year in the operating profit margin to 18.43% of net sales. The net profit margin increased 6.2% to 13.20% of net sales.
PepsiCo also provided the market with a guidance for full fiscal 2017. The company expects to close the year with EPS of $5.23. Capital expenditures are expected to be $3 billion. It expects to generate approximately $10 billion in cash flow from its operations and free cash flow of approximately $7 billion. It projects buying back about $2 billion worth of its own stock and to distribute $4.5 billion in dividends.
PepsiCo is trading at $109.13 per share with a market capitalization of $155.57 billion, a price-book (P/B) ratio of 12.59, a price-sales (P/S) ratio of 2.49 and a price-earnings (P/E) ratio of 23.17. The forward P/E ratio is 19.61.
The company distributes an annual dividend of $3.22 through quarterly payments of 80.5 cents, for a dividend yield of 2.95%.
Disclosure: I have no positions in PepsiCo.
This article first appeared on GuruFocus.
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The intrinsic value of PEP
