Will Pepsico (PEP) Stock Be Affected Today by Sudden Departure of Company President?

NEW YORK (TheStreet) -- Pepsico (PEP) said its president, Zein Abdalla, who had been considered a favorite to succeed CEO Indra Nooyi, will retire next month, according to Bloomberg.

The company gave no reason for the departure, which takes effect Dec. 31, and didn't announce a replacement, according to a regulatory filing yesterday.

Abdalla was named president in September 2012 after managing the company's European unit. The post is among the highest at Purchase, New York-based PepsiCo, the world's largest snack maker and second-biggest soda maker. Chief Financial Officer Hugh Johnston also is considered a likely successor to Nooyi, who hasn't said how long she intends to stay, Bloomberg reports.

 

Shares of Pepsico closed lower yesterday at $96.81.

TheStreet Ratings team rates PEPSICO INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate PEPSICO INC (PEP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, increase in net income, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • PEPSICO INC has improved earnings per share by 7.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PEPSICO INC increased its bottom line by earning $4.32 versus $3.92 in the prior year. This year, the market expects an improvement in earnings ($4.60 versus $4.32).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Beverages industry average, but is less than that of the S&P 500. The net income increased by 5.0% when compared to the same quarter one year prior, going from $1,913.00 million to $2,008.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Beverages industry and the overall market, PEPSICO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: PEP Ratings Report
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

More from Markets

Apple and GE Switch Roles; Musk's Super Control of Tesla Explained -- ICYMI

Apple and GE Switch Roles; Musk's Super Control of Tesla Explained -- ICYMI

Trump May Be More to Blame For Higher Oil Prices Than OPEC

Trump May Be More to Blame For Higher Oil Prices Than OPEC

Dow Falls Over 200 Points as Apple's Slump Offsets Gains in General Electric

Dow Falls Over 200 Points as Apple's Slump Offsets Gains in General Electric

Week Ahead: Major Earnings on Tap as Wall Street Readies for Geopolitical Moves

Week Ahead: Major Earnings on Tap as Wall Street Readies for Geopolitical Moves

3 Hot Reads From TheStreet's Top Premium Columnists

3 Hot Reads From TheStreet's Top Premium Columnists