PepsiCo (NASDAQ: PEP) reported strong second quarter earnings Tuesday, with revenue rising 20% compared to the previous year, amid high demand from restaurants. The company far surpassed forecasts made by analysts, with shares climbing over 2% during morning trading, reaching an all time high.
“A lot of the things we did through the pandemic, continuing to invest in the business, are now paying dividends now that mobility has increased and consumers are getting out more,” CFO Hugh Johnston said on CNBC’s “Squawk Box” on Tuesday.
The beverage and snacks giant reported earnings of USD1.72 per share, compared to the anticipated USD1.53 a share. Revenue totaled USD19.22 Billion, higher than analysts expected USD17.96 Billion. Furthermore, Pepsi detailed a net income of USD2.36 Billion, an increase from the previous year’s USD1.65 Billion.
“PepsiCo enters FY21 from a strong position and is well equipped to outperform in a post COVID-19 environment,” Bank of America analyst Bryan Spillane said in a note ahead of the results. Spillane rates the company’s stock at a Buy with a price target of USD165.
Nevertheless, according to executives, similar to other food and beverage companies, PepsiCo is experiencing higher costs for ingredients, freight and labor. Johnston revealed that the company usually increases prices after Labor Day, and said that the trend was likely to continue this year.
“We’re working with our partners in the retail space and in the away from home space to make the right decisions in pricing to give the consumers with us as we improve our margins,” CEO Ramon Laguarta said.
PepsiCo’s stock has risen 3% this year and has a market value of USD211 Billion.