PepsiCo beats by $0.05, reports revs in-line; raises FY17 EPS above consensus
- Reports Q3 (Sep) earnings of $1.48 per share, $0.05 better than the Capital IQ Consensus of $1.43; revenues rose 1.3% year/year to $16.24 bln vs the $16.35 bln Capital IQ Consensus.
- Reported net revenue increased 1.3%. Foreign exchange translation had a 1 percentage-point unfavorable impact on reported net revenue. Organic revenue, which excludes the impacts of foreign exchange translation and structural changes, grew 1.7%.
- Reported gross margin expanded 10 basis points and core gross margin contracted 15 basis points. Reported operating margin expanded 80 basis points and core operating margin expanded 30 basis points.
Guidance
- Co issues upside guidance for FY17, sees EPS of $5.23 vs. $5.16 Capital IQ Consensus Estimate.
- Based on current market consensus rates, foreign exchange is now expected to negatively impact core EPS by ~1 percentage point (previously 2 percentage points).
- The Company now expects full-year organic revenue growth to approximate its year-to-date growth rate (previously at least 3%).
- Based on current market consensus rates, foreign exchange translation is now expected to negatively impact reported net revenue growth by ~1 percentage point (previously 2 percentage points). The 53rd week in 2016 is expected to negatively impact reported net revenue growth by 1 percentage point.
- The Company continues to expect:
- Approximately $10 billion in cash flow from operating activities and approximately $7 billion in free cash flow (excluding certain items);
- Net capital spending of ~$3 billion
- Dividend payments of ~$4.5 billion
- Share repurchases of ~$2 billion
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