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PepsiCo shares rise after beating earnings estimates during third quarter

pepsico

PepsiCo shares are rising 1.5% during this morning pre-market stock trading activity on Wall Street after the company successfully beat earnings, revenues, and full-year outlook forecasts for the third quarter of 2020.

The snacks giant reported $18.09bn in revenues during the three-month period ended on 5 September, which represented a 5% jump compared to the $17.19bn it brought a year ago while also 5% above analysts’ expectations of $17.24bn for the quarter.

This growth can be partially attributed to a 31% increase in PepsiCo sales in Africa, the Middle East, and South Asia, along with a 15% jump in its revenues in Asia Pacific, Australia, New Zealand, and China region.

However, the Latin American segment showed a 15% drop in revenues during the 12 weeks covered by the report, while sales in North America and Europe grew at a slower rate of 7% and 3% respectively.

Core earnings per share for the quarter – a non-GAAP measure – landed at $1.66 per share vs. $1.56 the company reported the year before – while they also surpassed the Street’s estimate of $1.49 per share.

The Harrison-based company provided full-year guidance that included $5.5 in core earnings per share for the 12-month period – 13 cents higher than analysts’ estimates – along with a forecasted organic revenue growth rate of 4%.

Additionally, PepsiCo expects to return around $7.5bn to shareholders this year including $5.5bn in dividends and $2bn in the form of stock buybacks.

 

Are PepsiCo shares a buying opportunity based on these news?

pepsico shares
PepsiCo (PEP) price chart – 1-day candles view with RSI and MACD – Source: TradingView

PepsiCo shares recently slid from a previous post-pandemic high of $143 per share, following the broad-market correction that we saw during September.

The latest price action shows that the stock has been trading range-bound since a strong rebound off its March lows, moving between $127 and $140 during the 6 months that followed with only one failed break of that price channel in early September.

Today’s uptick could potentially break that price channel again and could end up retesting the $143 level. If that were to happen a new high in the RSI could be the indication that the stock will attempt to move even higher – possibly towards its all-time highs February.

However, traders should keep an eye on a potentially weaker RSI reading if a new high is reached, which would create a bearish divergence in the oscillator – an indicator that the stock’s momentum is weaker than it was during that previous failed break.

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All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Alejandro Arrieche

Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.