A First Impression Of Pepsi's Q3

PepsicCo, Inc. PEP was trading a bit lower Wednesday after investors had enough time to fully digest the company's earnings report, which included a revenue miss but earnings came in ahead of expectations.

Investors have "little reason" to be excited about PepsiCo's third quarter earnings, Wells Fargo's Bonnie Herzog commented in a report. There are multiple areas of concern and headwinds, including: ongoing pressures in Latin America, worse than expected volumes in the non-alcoholic beverage category (NAB), and operating cost inflation was observed in all segments.

The beverage and snack maker could achieve its revised full year fiscal 2017 earnings per share guidance (from $5.13 to $5.23) based on the company's productivity savings and cost cutting initiatives, the analyst added. On the other hand, the company also lowered its fiscal 2017 organic revenue growth rate from 3 percent to 2.3 percent

There were a few positive aspects of PepsiCo's earnings report that should be noted, including: a strong performance in Asia, Middle East, and North Africa, more favorable exchange rates in the quarter, and solid volume gains in Europe and Sub-Saharan Africa.

Bottom line, there are few positive catalysts ahead that could result in the stock moving meaningfully higher in the near-term and the stock's reaction to the downside is expected.

Related Links:

Pepsi Downgraded Just Ahead Of Earnings

Credit Suisse Downgrades PepsiCo To Neutral Amid 'Increased Caution' For Entire Sector