Pepsi's Growth Story Was All About Pricing
Positive net pricing drove nearly the entirety of the firm's 5% second-quarter organic revenue growth year over year, while volume growth slowed to a halt.
PepsiCo (PEP) continued to post solid price-driven organic revenue and profitability growth in its second quarter, and we are likely to raise our fair value estimate by $1-$2 to account primarily for the time value of money since our last update.
Overall, the firm executed against its cost-saving plan, particularly in its Frito-Lay North American segment, and operating margins (excluding restructuring and other charges) ticked up 62 basis points from a year ago. Frito-Lay remains the firm's most profitable segment, but after stripping out the sharply negative impact of foreign currency headwinds, which dragged down revenue and operating earnings growth 10 percentage points across the entire company, we're encouraged that the PepsiCo Americas beverages division also saw adjusted operating profit grow considerably faster than sales.
Adam Fleck does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.