Pepsico gains in premarket after Q3 earnings upbeat 📈

PepsiCo (PEP.US) reported financial results that beat analysts' expectations, helping the stock bounce back from unprecedented oversold levels. PepsiCo also raised its full-year earnings outlook and shares gain 2% before the Wall Street open. At the same time company's report opens Wall Street earnings season which will accelerate during next few days.

Revenues: $23.45 billion vs. exp. $23.38 billion forecast (7% y/y growth)

Earnings per share (EPS): $2.24 vs. exp. $2.15 and $1.95 in Q3 2022 (10% y/y increase)

Net income: $3.09 billion vs. $2.7 billion in Q3 2022

Organic sales: 8,8% vs exp. 8,3%

Sales volume: 2.5% decline

Estimates up - volume down?

• Pepsi expects 2023 earnings per share growth of 13% y/y, up from an earlier estimate of 12%. The company is raising forecasts for the third consecutive quarter but sales volume (excluding currency and price changes) has fallen - mainly due to higher prices in a declining inflation environment. Pepsi's beverage sales in the North American market experienced a 6% decline in volume.
• At the same time, revenue from Gatorade beverages increased significantly, and the company plans to resume sales of Mountain Dew Baja Blast, available at the Taco Bell quick-service restaurant chain. The company's food divisions performed better against the beverage segment. Quaker Foods North America's sales volume increased by 1% and Frito-Lay's volume was unchanged. At the same time, brands under the Quaker Foods banner increased shares in key markets, which potentially positions them favorably for the long term.

Pepsico chart

The recent oversold level has already proved extreme with the RSI on the D1 interval at 22 points - below the levels of the 2020 pandemic bottom. The stock is currently trading around $164 before the market open, and the sell-off has been halted at the 38.2 Fibonacci retracement of the March 2020 upward wave. However, the key resistance (SMA200, red line) runs much higher - around $180 per share. The company's shares have seen a nearly 20% correction since the peaks near $200, which does not happen often for Pepsico. 

Source: xStation5