MW PepsiCo's revenue misses amid 'subdued' trends and Quaker Oats recall fallout

By Tomi Kilgore

Profit extends long-streak of beats and dividend raised 5%, while Frito-Lay and Quaker Foods see some revenue weakness

Shares of PepsiCo Inc. were taking a hit in early trading Tuesday, after the beverage and snack giant reported a slight decline in quarterly revenue amid weakness in its North America Frito-Lay and Quaker Foods businesses.

Meanwhile, profit rose and extended its long streak of beats and the company boosted its dividend by 5%, lifting the stock's yield to triple that of the S&P 500.

"Our businesses remained resilient in 2024, despite subdued category performance trends in North America, the continued impacts related to a recall in our Quaker Foods North America division and business disruptions due to geopolitical tensions in certain international markets," said Chief Executive Ramon Laguarta.

The stock $(PEP)$ fell 2.7% in premarket trading.

For the fourth quarter to Dec. 28, net revenue declined 0.2% from a year ago, to $27.78 billion from $27.85 billion, while the FactSet consensus was for slight growth to $27.89 billion. That marked the third straight quarter in which revenue missed forecasts.

Revenue for Frito-Lay North America fell 2.1% to $7.32 billion and Quaker Foods North America revenue was also down 2.1% to $874 million, while PepsiCo Beverage North America revenue was little changed at $7.91 billion.

Quaker Foods was still feeling the impact of the recall of its granola bars and granola cereals in December 2023 due to concerns over salmonella contamination.

Net earnings rose to $1.52 billion, or $1.11 a share, from $1.30 billion, or 94 cents a share, in the same period a year ago.

Excluding nonrecurring items, core earnings per share rose $1.96, beating the FactSet consensus of $1.94. That marked at least the 22nd-straight quarter of bottom-line beats, based on available FactSet data.

For 2025, the company expects core EPS growth in the low-single-digit percentage range. The current FactSet consensus for 2025 EPS of $8.52 implies 4.4% growth.

The raised its annual dividend to $5.69 a share from $5.42 a share, effective with the dividend expected to be paid in June.

At Monday's stock closing price of $150.27, the new annual dividend rate implies a dividend yield of 3.79%, which compares with the yield for the Consumer Staples Select Sector SPDR ETF XLP of 2.74% and the implied yield for the S&P 500 index SPX of 1.26%.

PepsiCo's stock has dropped 9.7% over the past three months through Monday, while the S&P 500 has gained 4.9%.

-Tomi Kilgore

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February 04, 2025 07:05 ET (12:05 GMT)

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