PepsiCo's EPS Tops Estimates, Reaffirms Outlook

PepsiCo, Inc. PEP announced a 23 percent drop in net income to $945 million in the first quarter from $1.23 billion in the year-ago quarter. Its earnings dipped 21 percent to $0.64 a share from $0.81 a share in the comparable period. However, core earnings rose 7 percent to $0.89 a share thus beating the Street consensus by $0.08 a share.

On a GAAP basis, PepsiCo recorded 3 percent drop in revenue to $11.86 billion from $12.22 billion in the same quarter last year. On an organic basis, the company indicated its revenue grew 3.5 percent in the first quarter. Street analysts expected the beverage firm to deliver $11.88 billion revenue. The company's gross margin expanded 1.3 percentage points on an organic basis while GAAP basis gross margin expanded by 1.6 percentage points.

Chairman and CEO Indra Nooyi commented, "We delivered strong first quarter operating results driven by balanced execution of our commercial agenda and productivity programs. Our marketing initiatives and new product launches are generating solid organic top line growth, and our focus on driving greater efficiency throughout our operations contributed significantly to attractive core gross margin expansion."

The CEO said, "We are off to a strong start to the year and that gives us added confidence in achieving our financial objectives for 2016."

Moving ahead, PepsiCo reiterated its outlook for the current year. Accordingly, the company expects about 4 percent organic revenue growth, which excluded the 53rd week impact. The company also expects core earnings of $4.66 a share for the same period. Analysts predict the company to earn $4.70 a share on revenue of $62.88 billion for the year 2016.

The stock was up about 1.2 percent at $105 in the pre-market session.