This week I’d like to coddiwomple through making mistakes and staying data-dependent to gain a...
Update PepsiCo PEP
07/22/2009 1:34 pm EST
Before the open on July 22, the company reported second quarter earnings of $1.06 a share, 6 cents a share above Wall Street estimates, but flat with the second quarter of 2008. Revenue fell $400 million short of Wall Street's $10.99 billion in projected revenue, dropping about 3% from the second quarter of 2008.
Take out the effect of a stronger dollar, which makes overseas revenues denominated in baht, won, euros or whatever worth fewer dollars when they'fre translated for a U.S. company's financials, and the story is very different. In constant currencies earnings per share climbed 8% and revenue was up 5.5%.Management is doing exactly what investors should want to see during tough times: maintain marketshare and cut costs.
Globally unit volumes were up 1%--but that hides huge regional variation. The Frito-Lay North American snack foods business showed a 3% increase in volume, while beverage volume fell by 6%. International volumes grew by 3%.
Profit margins actually increased this quarter. Gross margins, for example, climbed 0.3 percentgage points, as cost cutting and p;roductivity iniatives kicked in.
The company reaffirmed its targets for 2009 of mid-to-high-single-digit, constant-currency revenue and earnings growth. Earnings for the full year, management said, will be in a range of $3.68 to $3.79, basically flat with 2008 earnings of $3.68 a share.
As of July 22, 2009, I'm keepinbg my target price at $62 a share by March 2010. On July 22 the shares carried a 3.2% dividend yield.
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