Pepsi did it again…
This morning, Pepsi announced that earnings per share once again beat expectations, marking a 13-quarter run for the soda pop blue chip.
PepsiCo’s second-quarter core earnings per share (EPS) were reported at $1.54, beating predictive estimates of $1.49. Even though core EPS declined 7.2% year over year, the current numbers show Pepsi is returning value to shareholders.
Pepsi also reported net revenues of $16,449 million, a 2.2% advance year over year, and again beat estimates for this total.
None of this has seemed to raise Pepsi’s stock, since the equity is currently below its previous close at $132.56. PEP is down over the month, but up over six months, with the last sustained drop near the end of May.
Of course, buy and holders are still seeing profit from last year, when a Thanksgiving-to-Christmas slide erased nearly 10% of the stock price. It took Pepsi until around Easter to bounce back, as the soft drink maker saw value increases during Lent. Currently, the stock remains near 52-week highs, although it is headed down in the daily market session.
So Why Is Core EPS Down?
Pepsi execs have a reason why core EPS is down: SG&A expenses are impacting profit margins. Selling, general and admin expenses are commonly a pretty esoteric part of a report: they include quite a few different types of line items and account for one of the biggest non-production costs in a company’s ledger. So it might take a bit more budgetary digging to see where money came out that might have instead been returned to shareholders.
Today, Pepsi-Co is moving lower. If positive EPS numbers aren’t enough to goose the stock, it’s worth looking critically at performance as the third quarter proceeds.
