PepsiCo (PEP) International Revenue Performance Explored

Have you looked into how PepsiCo (PEP) performed internationally during the quarter ending September 2024? Considering the widespread global presence of this food and beverage company, examining the trends in international revenues is essential for assessing its financial resilience and prospects for growth.

In the current era of a tightly interconnected global economy, the proficiency of a company to penetrate international markets significantly influences its financial health and trajectory of growth. For investors, the key is to grasp how reliant a company is on overseas markets, as this provides insights into the durability of its earnings, its ability to exploit different economic cycles, and its overall growth capabilities.

Participation in global economies acts as a defense against economic difficulties at home and a pathway to more rapidly developing economies. However, it also comes with the complexities of dealing with fluctuating currencies, geopolitical risks and different market dynamics.

While analyzing PEP's performance for the last quarter, we found some intriguing trends in revenues from its overseas segments that Wall Street analysts commonly model and monitor.

The company's total revenue for the quarter amounted to $23.32 billion, marking a decrease of 0.6% from the year-ago quarter. We will next turn our attention to dissecting PEP's international revenue to get a clearer picture of how significant its operations are outside its main base.

A Dive into PEP's International Revenue Trends

During the quarter, Latin America contributed $2.92 billion in revenue, making up 12.5% of the total revenue. When compared to the consensus estimate of $3.15 billion, this meant a surprise of -7.38%. Looking back, Latin America contributed $3.05 billion, or 13.5%, in the previous quarter, and $3.06 billion, or 13%, in the same quarter of the previous year.

Europe generated $3.95 billion in revenues for the company in the last quarter, constituting 16.9% of the total. This represented a surprise of +0.74% compared to the $3.92 billion projected by Wall Street analysts. Comparatively, in the previous quarter, Europe accounted for $3.52 billion (15.6%), and in the year-ago quarter, it contributed $3.7 billion (15.8%) to the total revenue.

Of the total revenue, $1.55 billion came from Africa, Middle East and South Asia during the last fiscal quarter, accounting for 6.7%. This represented a surprise of -9.1% as analysts had expected the region to contribute $1.71 billion to the total revenue. In comparison, the region contributed $1.59 billion, or 7.1%, and $1.62 billion, or 6.9%, to total revenue in the previous and year-ago quarters, respectively.

Asia Pacific, Australia and New Zealand and China Region accounted for 5.1% of the company's total revenue during the quarter, translating to $1.2 billion. Revenues from this region represented a surprise of -4.59%, with Wall Street analysts collectively expecting $1.25 billion. When compared to the preceding quarter and the same quarter in the previous year, Asia Pacific, Australia and New Zealand and China Region contributed $1.1 billion (4.9%) and $1.22 billion (5.2%) to the total revenue, respectively.

Revenue Forecasts for the International Markets

Wall Street analysts expect PepsiCo to report a total revenue of $28.29 billion in the current fiscal quarter, which suggests an increase of 1.6% from the prior-year quarter. Revenue shares from Latin America, Europe, Africa, Middle East and South Asia and Asia Pacific, Australia and New Zealand and China Region are predicted to be 14.7%, 16.1%, 7.2% and 5.4%, corresponding to amounts of $4.17 billion, $4.56 billion, $2.04 billion and $1.54 billion, respectively.

For the entire year, the company's total revenue is forecasted to be $92.5 billion, which is an improvement of 1.1% from the previous year. The revenue contributions from different regions are expected as follows: Latin America will contribute 13.4% ($12.43 billion), Europe 15.1% ($13.93 billion), Africa, Middle East and South Asia 6.9% ($6.38 billion) and Asia Pacific, Australia and New Zealand and China Region 5.4% ($4.96 billion) to the total revenue.

Wrapping Up

The dependency of PepsiCo on global markets for its revenues presents a mix of potential gains and hazards. Thus, monitoring the trends in its overseas revenues can be a key indicator for predicting the firm's future performance.

In an environment where global interconnections and geopolitical skirmishes are intensifying, Wall Street analysts keep a keen eye on these trends, particularly for firms with overseas operations, to adjust their earnings predictions. Moreover, a range of other aspects, including how a company fares in its home country, significantly affects these projections.

Here at Zacks, we put a great deal of emphasis on a company's changing earnings outlook, as empirical research has shown that's a powerful force driving a stock's near-term price performance. Quite naturally, the correlation is positive here -- an upward revision in earnings estimates drives the stock price higher.

With an impressive externally audited track record, our proprietary stock rating tool - the Zacks Rank - harnesses the power of earnings estimate revisions and serves as an effective indicator of a stock's near-term price performance.

PepsiCo currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here

A Look at PepsiCo's Recent Stock Price Performance

Over the past month, the stock has lost 1.4% versus the Zacks S&P 500 composite's 4.9% increase. The Zacks Consumer Staples sector, of which PepsiCo is a part, has declined 1.9% over the same period. The company's shares have increased 3.2% over the past three months compared to the S&P 500's 4.5% increase. Over the same period, the sector has risen 5.3%.

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