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Buy Pepsico Stock After Earnings, Jim Cramer Says

Time to take a sip of Pepsico stock? Jim Cramer breaks down his take on Pepsico earnings.

Taking a sip of Pepsico stock?

Pepsico kicked off the first week of quarterly earnings ahead of the opening bell Monday. The beverage giant reported adjusted earnings per share of $1.32, exceeding estimates of $1.29.

While revenue of $15.95 billion exceeded estimates of $15.38 billion, the result marked a 3.1% decline from the same period last year. Leading the drop was a 7% drop in sales from Pepsico’s North American beverage division. Beverages did see growth in retail sales, but the division still faces the major headwind of shuttered restaurants, bars, movie theaters and sports stadiums.

Pepsico saw further strength in some of its food and snacks divisions. Quaker Foods North America reported that organic revenue grew 23%.

“Despite being faced with significant challenges and complexities as a result of the COVID-19 pandemic, our businesses performed relatively well during the quarter, with a notable level of resiliency in our global snacks and foods business,” Pepsico CEO Ramon Laguarta said in the earnings release.

Pepsico did not provide expectations for the current quarter or an outlook for fiscal 2020. “The environment has remained volatile and much uncertainty remains about the duration and long-term implications of the pandemic,” Laguarta said.

Though no guidance was offered, Pepsico continues to expect a core effective tax rate of approximately 21% and plans to return around $7.5 billion to shareholders. The company also expects a 3 percentage-point foreign exchange translation to be a headwind going forward. 

Jim Cramer owns Pepsico as part of his Action Alerts PLUS charitable portfolio. He says if you don't already own the stock, consider this your moment.