This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Pepsi's Costs May Put a Cap on Profit

PURCHASE, N.Y. ( TheStreet) -- When PepsiCo (PEP - Get Report) reports quarterly earnings Wednesday, investors will pay close attention to word from the beverage and snack company on consumer demand and pricing.

Pepsi

Analysts expect Pepsi to have earned a profit of $2.08 billion, or $1.30 a share, in its fiscal third quarter ended Sept. 30, up 9.5% from $1.9 billion, or an adjusted $1.22 a share, earned in the year-earlier quarter. Revenue is expected to have grown 10.9% to $17.19 billion from $15.5 billion. Pepsi's report is due ahead of the opening bell Wednesday.


In July , Pepsi lowered its guidance for the year citing soft consumer demand in developed markets like North America, while input costs for commodities and fuel were rising. To offset these rising costs, Pepsi said it would implement previously announced incremental price increases. It forecast high-single-digit EPS growth on a core, 52-week basis, compared with a fiscal 2010 profit of $4.13 a share. Analysts at the time expected Pepsi to earn $4.50 a share for fiscal 2011, but the consensus has since dropped to $4.41.

While demand in developed markets has waned somewhat, the opposite is true in emerging markets like Brazil, Russia and India where disposable income among consumers is growing. Pepsi's exclusive contract with Yum! Brands (YUM - Get Report) to serve Pepsi products in its restaurants also helps, particularly in the fast-growing market of China. Yum, which operates Taco Bell, Pizza Hut and KFC restaurants, last week matched quarterly profit expectations as continued strong performance in China drove year-over-year revenue growth of more than 14%.


As of earlier this year , Pepsi had been able to manage the risk of rising commodity costs better than Coca-Cola (KO - Get Report). Pepsi had turned to improved operational efficiencies and price increases to help offset those costs, but Chief Financial Officer Hugh Johnston conceded in April that pricing in the first half of the year "has not been what we would have liked or expected."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DPS $77.06 0.57%
KO $39.27 1.39%
PEP $93.60 1.20%
YUM $82.27 3.25%
AAPL $112.92 2.94%

Markets

Chart of I:DJI
DOW 16,654.77 +369.26 2.27%
S&P 500 1,987.66 +47.15 2.43%
NASDAQ 4,812.7080 +115.1720 2.45%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs