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PepsiCo shares hover near 1-year low after second-quarter sell-off
PepsiCo’s latest quarter showed weaker North America demand, with beverage volumes down 4% and core operating margins falling 40 basis points year over year.
PepsiCo shares are hovering around a one-year low after a steady sell-off that followed the company’s second-quarter earnings report on July 9, according to Yahoo Finance. The stock was trading at a forward P/E of about 15.4, the lowest multiple in more than a decade, with shares down roughly 5% since the report.
In the quarter, PepsiCo reported revenue of $24.2 billion, up 6.4% year over year and above Wall Street expectations. Adjusted earnings per share were $2.20, roughly in line but slightly below some analyst estimates, while management pointed to caution among US consumers, especially in snacks and beverages.
The company’s biggest pressure came from North America, where snack volumes were flat and beverage volumes declined 4% as consumers pulled back on more discretionary purchases. PepsiCo also reported margin headwinds, with core operating profit margins falling 40 basis points year over year, alongside pricing actions on brands such as Lay’s and Doritos that have weighed on pricing power.
Despite the downgrade signals, management maintained its full-year outlook, targeting 2% to 4% organic revenue growth and 4% to 6% core constant-currency EPS growth. Yahoo Finance also highlighted that PepsiCo warned North American recovery may take longer and that input cost inflation could rise in the second half of the year, leaving investors skeptical of whether the company can sustain its US growth target.