PepsiCo Earnings: Profit Expansion on International Growth and Cost Control, Despite Quaker Recalls

We plan to maintain our $176 fair value estimate for wide-moat PepsiCo after absorbing its first-quarter results that matched our estimates. Organic sales were up 3%, led by international growth. EPS rose 6%, benefiting from expense control. Although we expect Quaker product recalls will continue to weigh on US sales in the next few quarters, we view the firm as remaining on track to increase 2024 sales and EPS by 4% and 7%, respectively. Our 10-year forecasts for 5% sales CAGR and 17% average operating margins remain in place, and we view shares as slightly undervalued.