Ozempic and other weight-loss drugs didn't slim down the third quarter results for PepsiCo (PEP).
The maker of Pepsi soda and Frito Lay snacks hammered Wall Street profit estimates on Tuesday, sending shares 2% higher in early trading.
The company notched sales gains in all its business segments, save for Africa/Middle East. Core earnings per share growth tallied 16% from the prior year, outpacing sales growth by more than two times.
The earnings rundown
Net sales: +6.7% year over year to $23.45 billion vs. estimates for $23.38 billion
Frito-Lay North America sales: +7% year over year to $5.95 billion vs. estimates for $5.96 billion
Quaker Foods North America sales: +5% year over year to $747 million vs. estimates for $729.2 million
North America beverages: +8% year over year to $7.16 billion vs. estimates for $6.98 billion
Europe sales: +2% year over year to $3.7 billion vs. estimates for $3.87 billion
Latin America sales: +21% year over year to $3 billion vs. estimates for $2.98 billion
Africa/Middle East sales: -6% year over year to $1.61 billion vs. estimates for $1.64 billion
Asia Pacific sales: +4% year over year to $1.21 billion vs. estimates for $1.22 billion
Organic sales growth: +8.8% year over year vs. estimates for +8.3%
Core EPS: +16% year over year to $2.25 vs. estimates for $2.16
Core EPS guidance: +13% year over year versus the previous outlook for 12% growth
Yahoo Finance's hot take
The normally steady-Eddie shares of PepsiCo have fallen about 12% in the past three months (alongside sell-offs in other food-related stocks), as chatter permeates Wall Street about the impact to the industry from the proliferation of new weight-loss drugs like Ozempic.
PepsiCo's results and CEO commentary on earnings day poke a hole in the thesis behind the sell-off, however.
The company not only lifted its full-year earnings outlook but said it sees 2024 sales and earnings growth at the top end of its longer-term targets. CEO Ramon Laguarta called out further "strength" and "resilience" in PepsiCo's product categories.
CFO Hugh Johnston reiterated that view in a new Yahoo Finance Live interview (video above).
The vibe is similar to what Constellation Brands CEO Bill Newlands told Yahoo Finance post-earnings last week — none of his customer research shows a reduced appetite for beer because of Ozempic (video above).
If the normally cautious PepsiCo thought Ozempic would reduce the heft of its profits, investors would have received a slimmed-down outlook today. This is not a management team that likes to surprise investors negatively.
The fact they didn't is telling.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected].