It is anticipated that difficulties facing PepsiCo's North American operations have impacted the business's earnings in the third fiscal quarter of 2024. Now, investors should monitor how the management aims to overcome the situation, which will help to find the future price of PEP stock.
PEP's Struggle On North American Market
The weak category need in PEP's North American convenience food sector continues to affect the company's top-line profitability. Due to extreme pricing tactics that caused consumers to change their purchasing patterns in the face of economic duress, the corporation has faced decreased customer demand in its important North American regions. Consequently, the PepsiCo Beverages North America (PBNA) and Frito-Lay North America (FLNA) segments have seen soft earnings trends.
Product recalls connected to contamination issues like Salmonella have negatively impacted the QFNA market, which includes brands like Quaker Oats and a range of cereal and snack goods. These recalls have impacted the segment's efficiency, leading to lower sales and profitability over recent quarters.
PEP Global Business Outlook
Nonetheless, it is anticipated that PEP's robust global business, supported by category expansion in new and developing markets, somewhat padded the leading line in the year's third quarter. We anticipate that the firm will significantly increase organic revenue in the third quarter across all of its foreign units, including growth rates of 3% in Latin America, 10% in Europe and AMES, and in APAC for 7%.
The company's continuous holistic cost-management activities, which have been generating greater logistics and distribution productivity, should continue to pay off, as seen by the to-be-reported quarter's bottom line and profitability results.
During the last three months, PepsiCo's stock has grown slowly. In comparison, the industry and the Consumer Staples segment have increased by 8.4% and 8.9%, respectively, while the stock has increased by 4.2%. The S&P 500 index rose 2.6% in the same time frame, yet PepsiCo's share has outperformed it.
