Shares of PepsiCo Inc. fell 1.1% in premarket trading on Friday, retreating from a five-month high, following the company’s surprising decline in fourth-quarter revenue. Despite this setback, the beverage and snack giant exceeded profit expectations and announced a 7% increase in its dividend.
Strong Profit Performance
PepsiCo’s net income soared to $1.3 billion, or 94 cents per share, compared to $518 million, or 37 cents per share, in the same period last year. After excluding nonrecurring items, core earnings per share reached $1.78, surpassing the FactSet consensus of $1.72.
Unanticipated Revenue Slump
However, the company experienced a slight drop in revenue, slipping 0.5% to $27.85 billion. Analysts had predicted an increase of 1.4% to $28.40 billion. This decline was primarily driven by weakness in PepsiCo’s North American businesses. Specifically, PepsiCo Beverages North America witnessed a 2% decline in revenue, Frito-Lay North America experienced a 3% decrease, and Quaker Foods North America saw a significant drop of 16%.
Promising Outlook
Looking ahead, PepsiCo forecasts a core EPS of “at least” $8.15 for 2024, which aligns with the FactSet consensus. Despite the revenue setback, the company remains optimistic about its future performance.
Dividend Increase
Additionally, PepsiCo announced that it will raise its annual dividend to $5.42 per share, effective in June. This is an increase from the previous dividend of $5.06 per share.
Stock Performance
Over the past three months, PepsiCo’s stock has gained 4.6%, showcasing its resilience amid market volatility. In comparison, the Consumer Staples Select Sector SPDR ETF has risen by 7.8%, while the S&P 500 has surged 15%.
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