PepsiCo (PEP) stock gains, Conagra (CAG) declines on forecast update

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PepsiCo (PEP) stock gains, Conagra (CAG) declines on forecast update

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 PepsiCo (PEP) stock gains, Conagra (CAG) declines on forecast update
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  • PepsiCo expects 6% organic revenue growth and 11% EPS growth in fiscal 2021.
  • Conagra expects the impact of increased inflation in the first half of fiscal 2022.
  • PepsiCo stock is up around 3% year to date, while Conagra Brands stock is down 4%.

PepsiCo, Inc. (NASDAQ: PEP) stock rose when markets opened on Tuesday after the company lifted its fiscal 2021 outlook, while Conagra Brands, Inc. (NYSE: CAG) stock fell as it slashed its fiscal 2022 forecast.

PepsiCo improved its forecast after reporting strong results for its second quarter ended June 13. Packaged food company Conagra cut its guidance for fiscal 2022 following the increase in inflation.

As of 10.13 am ET, PepsiCo shares were trading at US$153.42, up 2.62 percent, while Conagra shares dropped 4.62 percent to US$34.27.

PepsiCo improves fiscal 2021 forecast after strong Q2 results

The snacks and beverage maker now anticipates 6 percent organic revenue growth and 11 percent core constant currency EPS growth for the fiscal year 2021. Previously, the company was expecting the revenue growth to be in the mid-single digits and EPS to grow at high-single digits.

PepsiCo’s second-quarter net income came in at US$2.34 billion or US$1.70 per share, compared with US$1.65 billion, or US$1.18 per share, in the year-ago quarter.

The New York-based company, which owns snacks and beverage brands including Gatorade, Tropicana, Aquafina, 7 Up, Lay's, Doritos, Quaker Foods and Starbucks, reported a 20.5 percent year-over-year topline growth to US$19.22 billion.

PepsiCo’s beverage businesses in the US and Canada recorded 21 percent organic revenue growth during the quarter on a 15 percent increase in volume. Frito-Lay North America business, which includes Doritos and Cheetos, reported organic revenue growth of 6 percent.

However, the Quaker Foods North America business saw its organic revenue fall 21 percent as volume plunged 21 percent.

Meanwhile, the company extended its annual cost-cutting target of at least US$1 billion through the end of 2026.

PepsiCo currently has a market capitalization of US$212.29 billion and its stock returned over 3 percent this year.

READ MORE: JP Morgan, Goldman Sachs start earnings season with strong Q2 results

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Conagra cuts fiscal 2022 guidance on inflation woes

The Chicago-based branded food company now projects its organic net sales for fiscal 2022 to be flat when compared to the fiscal 2021 figure while adjusted EPS is forecasted to be US$2.50.

Earlier, the company had said it anticipates organic net sales to grow up to 2 percent and expected adjusted EPS between US$2.63 and US$2.73.

Conagra noted the increased inflation since the fiscal 2021 third quarter and expects the impact to be felt particularly in the first half of this fiscal year.

Meanwhile, the company reported a 5.1 percent year-over-year growth in its organic net sales to US$11.10 billion during the fiscal year 2021 ended May 30. Diluted EPS grew 54.7 percent to US$2.66 and adjusted EPS rose 15.8 percent to US$2.64.

In the fourth quarter of fiscal 2021, Conagra saw its organic net sales decline 10.1 percent to US$2.71 billion.  Diluted EPS from continuing operations rose 56.1 percent to 64 cents, while adjusted EPS fell 28 percent to 54 cents.

In addition, the company’s board approved a 14 percent hike in its annualized dividend rate.

Conagra’s market capitalization is US$16.54 billion. Its stock is down 4 percent year to date.

Please note: The above constitutes a preliminary view and any interest in stocks/cryptocurrencies should be evaluated further from an investment point of view.


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