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PepsiCo’s shares gain despite 2024 outlook cut

Wednesday, October 09, 2024

Today’s headlines

What’s happening: Shares of PepsiCo edged higher on Tuesday, after the company released its third-quarter results.

What happened: The beverage and snack maker reported better-than-expected earnings for the latest quarter.

However, PepsiCo announced downbeat quarterly sales and slashed its organic revenue guidance for 2024.

How were the results: The Purchase, New York-based company reported a contraction in sales in the quarter ended September 7.

  • Net revenues fell 0.6% year-over-year to $23.319 billion, missing consensus estimates of $23.825 billion.
  • Adjusted earnings came in at $2.31 per share, which topped Wall Street expectations of $2.29 per share.

Why it matters: North American customers cut back on their spending on sodas and snacks, as higher inflation and borrowing costs weighed on their overall budget.

Net revenues from Frito-Lay North America fell 1% year-over-year, while Quaker Foods North America revenues contracted by 13%. Revenues from PepsiCo Beverages North America came in flat in the quarter.

While sales in Latin America declined 5% year-over-year, sales in Europe climbed 7% during the latest quarter.

“There are pockets of growth and strength in the international market. Southeast Asia and India are markets that are growing nicely,” CEO Ramon Laguarta said.

PepsiCo’s gross margins expanded by 94 basis points (bps) to 55.4% during the quarter, although operating margins narrowed by 51 bps to 16.6%.

Management reduced their 2024 guidance for organic revenue growth to “a low single-digit increase,” from their previous projection of about 4%.

“We continue to expect to deliver at least 8 percent core constant currency EPS growth as we will focus on tightly managing our costs to better align with the subdued growth environment that we are currently operating in,” Laguarta stated.

How shares responded: PepsiCo’s shares gained 1.9% to close at $170.42 on Tuesday, following the release of quarterly results. The stock has shed around 4% over the past month.

What to watch: Investors will continue monitoring consumer spending in North America, which is expected to significantly impact the company’s results ahead. Rising geopolitical concerns are also expected to weigh on PepsiCo’s results.

The markets today

The Canadian dollar in focus today ahead of this week’s jobs report

Context: The CAD/USD forex pair moved lower on Tuesday, amid a decline in crude oil prices.

Details: The Canadian dollar tumbled to a seven-week low versus the US dollar on Tuesday. A sharp decline in the price of crude oil, one of Canada’s major exports, exerted pressure on the loonie. Both WTI and Brent crude oil prices declined by around 3%.

The US dollar remained close to a seven-week high versus its major rivals on Tuesday, which weighed on the CAD/USD pair. Speculations of the Federal Reserve cutting interest rates at a slower pace than was earlier expected and the strong NFP jobs released on Friday kept the US dollar elevated.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged higher to 102.55 on Tuesday.

On the economic data front, Canada’s trade deficit widened to C$1.10 billion in August, from C$0.29 billion in July. The figure was also worse than market estimates of C$0.5 billion. This signalled the biggest deficit since May, as exports fell 1.0% year-over-year and energy shipments declined 3.0%.

The CAD/USD forex pair fell around 0.2% to 1.3649 on Tuesday, after hitting its lowest intraday level since August 19 during the session. The S&P/TSX Composite Index shed 0.13% to close at 24,072.51.

What to watch: With no major economic reports due today, investors await the release of jobs data on Friday. The unemployment rate in Canada, which rose to 6.6% in August, is expected to rise further to 6.7% in September.

The country is expected to report job adds of 27,000 in September, following job adds of 22,100 in August. Analysts expect average working hours to increase by 4.8% year-over-year in September, following a 4.9% gain in the previous month.

Other Markets: European indices closed lower on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 1.36%, 0.20%, 0.72% and 0.55%, respectively.

The news shaping the markets

NATO chief Mark Rutte asked allies to increase arms supplies to Ukraine, while warning that this winter could be the most difficult one for the region since the invasion by Russia. The news sent the RUB/USD pair slightly lower in forex trading this morning.


Indonesia’s car sales declined by 9.1% year-over-year to 72,667 units in September. The contraction being lower than the 14.2% decline reported in August lent support to the IDR/USD forex pair.


The Reserve Bank of New Zealand slashed its official cash rate by 50 basis points, which sent the NZD/USD pair lower in forex trading this morning.


Argentina’s industrial production declined by 6.9% year-over-year in August. This being the fifteenth straight month of contraction exerted pressure on the ARS/USD forex pair.


US NFIB Small Business Optimism Index surged to 91.5 in September, versus a reading of 91.2 in the previous month, which sent the Nasdaq 100 higher by more than 300 points on Tuesday.

What else to watch today

Germany’s balance of trade, Japan’s machine tool orders, US MBA mortgage applications, crude oil stocks change, distillate stocks, gasoline stocks, wholesale inventories and Fed minutes, Brazil’s inflation rate, Mexico’s inflation rate, as well as France’s new passenger car registrations.


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