PepsiCo, Inc. PEP has reported strong third-quarter 2020 results, wherein earnings and sales surpassed estimates and improved year over year as well. Despite continued challenges related to the coronavirus pandemic, the company’s robust third quarter performance was backed by its resilience and strength in the global snacks and foods business as well as improvement in the beverage category.

The company also gained from its strong portfolio of brands, a responsive supply chain and flexible go-to-market systems, which helped maintain continued supplies amid the coronavirus pandemic.

Shares of this Zacks Rank #3 (Hold) company have inched up 1.4% year to date against the industry’s 8.5% decline.

Quarter in Detail

PepsiCo’s third-quarter core EPS of $1.66 beat the Zacks Consensus Estimate of $1.48 and also increased 6.4% year over year. In constant currency, core earnings were up9% from the year-ago period. The company’s reported EPS of $1.65rose 10% year over year.

PepsiCo, Inc. Price, Consensus and EPS Surprise

PepsiCo, Inc. Price, Consensus and EPS Surprise

PepsiCo, Inc. price-consensus-eps-surprise-chart | PepsiCo, Inc. Quote

Net revenues of $18,091 million improved 5.3% year over year and also surpassed the Zacks Consensus Estimate of $17,288 million. On an organic basis, revenues grew 4.2% year over year. Foreign currency impacted revenues and earnings by 2% and 3%, respectively, in the third quarter. Revenues benefited from continued momentum in snacking category as well as gains in beverage business.

Revenues also reflected gains from strong volume growth and robust pricing during the quarter. Total volume increased 2% in the reported quarter. Notably, organic volume for snacks/food business improved 4% while it slipped2% for the beverage business. Meanwhile, net pricing climbed 3% in the third quarter, driven by strong pricing across almost all segments, except AMESA.

On a consolidated basis, reported gross margin contracted 32 basis points (bps) while core gross margin declined60 bps. Reported operating margin

On Thursday, before the opening bell, PepsiCo reported better-than-expected earnings results with its fiscal year 2020 third-quarter earnings release. On the top line, revenues of $18.09 billion exceeded expectations of $17.23 billion. On the bottom line, adjusted earnings per share of $1.66 exceeded expectations of $1.49 per share.

In addition to the positive headline numbers, PepsiCo’s organic revenue increased by 4.2 percent. Pepsi’s Frito-Lay and Quaker Foods businesses both reported organic revenue growth of 6%.  Its North American beverage unit’s organic sales rose by 3% this quarter.

In the press release, Chairman and CEO Ramon Laguarta said: “Despite the ongoing volatility and complexity in our operating environment, I believe our third quarter performance reinforces the diversification of our portfolio, the resilience and agility of our teams across every continent and demonstrates our ability to support our customers and communities during their time of need while also delivering good results for our shareholders.”

He also noted: “As the environment continues to evolve, we remain committed to executing on our strategy to become Faster, Stronger, and Better and win in the marketplace. Given our year-to-date business performance and based on what we can reasonably predict at this time, we are providing an update to our full-year 2020 guidance and now expect to deliver approximately 4 percent organic revenue growth and approximately $5.50 in core earning per share”.

For the full year, PepsiCo now expects approximately $10 billion in cash from operating activities and free cash flow of approximately $6 billion, and net capital spending of $4 billion. Total cash return to shareholders is expected to be approximately $7.5 billion, dividends of approximately $5.5 billion, and shares repurchases of approximately $2.0 billion.

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PepsiCo Inc. is a holding in

Pepsi (PEP) will report third quarter fiscal 2020 earnings results before the opening bell Thursday. The snack and beverage giant has taken a hit during the pandemic, in part due to the lockdown restrictions and the effect restaurant closures has had on the company’s soda and overall beverage sales.

In that same vein, however, with more people working and learning from home, Pepsi’s Frito-Lay brands snack business has taken off as shoppers stocked both their pantries and refrigerators with several Pepsi prepared-food brands such as Quaker Foods and Rice-A-Roni. While the company reported an 2% decline in Q2 organic revenue, this was nonetheless better than expected as overall demand took a hit at the height of the pandemic — an issue that also impacted rivals Coca-Cola (KO) and Keurig Dr. Pepper Snapple (KDP).

Nonetheless, Pepsi’s diversified food and beverage portfolio was a notable asset to the company, unlike its aforementioned rivals as Q2 total core gross margin rate grew 6 basis points to 55.6%. It’s for this reason, among other achievements, that Pepsis stock has outperformed the Consumer Staples Select Sector SDPR ETF (XLP) over the past six months. For the share price to remain bubbly, on Thursday the company will need to plant more optimism about the sustainability of its growth drivers, including its Frito-Lay North America business.

For the three months that ended September, Wall Street expects the company to earn of $1.48 per share on revenue of $17.21 billion. This compares to the year-ago quarter when earnings came to $1.56 per share on $17.19 billion in revenue. For the full year, ending in October, earnings of $5.36 per share would decline 3% year over year, while full-year revenue of $68 billion would rise about 1.2% year over year.

While the expected year-over-year declines in Q3 EPS