Have you assessed how the international operations of PepsiCo (PEP) performed in the quarter ended December 2024? For this food and beverage company, possessing an expansive global footprint, parsing the trends of international revenues could be critical to gauge its financial resilience and growth prospects.
In today's increasingly interconnected global economy, a company's ability to tap into international markets can be a pivotal factor in shaping its overall financial health and growth trajectory. For investors, understanding a company's reliance on overseas markets has become increasingly crucial, as it offers insights into the company's sustainability of earnings, ability to tap into diverse economic cycles and overall growth potential.
International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.
In our recent assessment of PEP's quarterly performance, we discovered notable trends in its overseas revenue sections, which are typically modeled and scrutinized by Wall Street analysts.
For the quarter, the company's total revenue amounted to $27.78 billion, experiencing a decline of 0.2% year over year. Next, we'll explore the breakdown of PEP's international revenue to understand the importance of its overseas business operations.
Exploring PEP's International Revenue Patterns
During the quarter, Europe contributed $4.48 billion in revenue, making up 16.11% of the total revenue. When compared to the consensus estimate of $4.41 billion, this meant a surprise of +1.59%. Looking back, Europe contributed $3.95 billion, or 16.92%, in the previous quarter, and $4.22 billion, or 15.14%, in the same quarter of the previous year.
Africa, Middle East and South Asia accounted for 7.32% of the company's total revenue during the quarter, translating to $2.03 billion. Revenues from this region represented a surprise of +2.37%, with Wall Street analysts collectively expecting $1.99 billion. When compared to the preceding quarter and the same quarter in the previous year, Africa, Middle East and South Asia contributed $1.55 billion (6.66%) and $1.94 billion (6.96%) to the total revenue, respectively.
Of the total revenue, $3.69 billion came from Latin America during the last fiscal quarter, accounting for 13.28%. This represented a surprise of -1.84% as analysts had expected the region to contribute $3.76 billion to the total revenue. In comparison, the region contributed $2.92 billion, or 12.50%, and $3.97 billion, or 14.24%, to total revenue in the previous and year-ago quarters, respectively.
Asia Pacific, Australia and New Zealand and China Region generated $1.48 billion in revenues for the company in the last quarter, constituting 5.34% of the total. This represented a surprise of -0.62% compared to the $1.49 billion projected by Wall Street analysts. Comparatively, in the previous quarter, Asia Pacific, Australia and New Zealand and China Region accounted for $1.2 billion (5.12%), and in the year-ago quarter, it contributed $1.45 billion (5.22%) to the total revenue.
Revenue Forecasts for the International Markets
Wall Street analysts expect PepsiCo to report $18.15 billion in total revenue for the current fiscal quarter, indicating a decline of 0.6% from the year-ago quarter. Europe, Africa, Middle East and South Asia, Latin America and Asia Pacific, Australia and New Zealand and China Region are expected to contribute 10.6% ($1.93 billion), 5.7% ($1.03 billion), 10.6% ($1.92 billion) and 6% ($1.08 billion) to the total revenue, respectively.Analysts expect the company to report a total annual revenue of $93.01 billion for the full year, marking an increase of 1.3% compared to last year. The expected revenue contributions from Europe, Africa, Middle East and South Asia, Latin America and Asia Pacific, Australia and New Zealand and China Region are projected to be 15.1% ($14.02 billion), 6.8% ($6.33 billion), 12.6% ($11.68 billion) and 5.4% ($4.99 billion) of the total revenue, in that order.
Wrapping Up
PepsiCo's leaning on foreign markets for its revenue stream presents a mix of chances and challenges. Therefore, a vigilant watch on its international revenue movements can greatly aid in projecting the company's future direction.In a world where international interdependencies and geopolitical conflicts are ever-increasing, Wall Street analysts closely monitor these trends for companies having international presence to adjust their earnings forecasts. Of course, there are several other factors, including a company's standing within its home borders, that influence analysts' earnings forecasts.
At Zacks, a company's changing earnings outlook is given considerable attention due to its proven, strong influence on a stock's price performance in the near term. The connection here is straightforward and positive: when earnings estimates are revised upward, the stock price generally follows suit, increasing as well.
Boasting a remarkable track record that's been externally verified, the Zacks Rank, our unique stock rating system, leverages changes in earnings projections to function as a reliable gauge for predicting short-term stock price movements.
PepsiCo, bearing a Zacks Rank #4 (Sell), is expected to underperform the broader market's movements in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
PepsiCo's Recent Stock Market Performance
Over the preceding four weeks, the stock's value has appreciated by 1.4%, against an upturn of 2.1% in the Zacks S&P 500 composite. In parallel, the Zacks Consumer Staples sector, which counts PepsiCo among its entities, has appreciated by 1.7%. Over the past three months, the company's shares have seen a decline of 8.9% versus the S&P 500's 1.2% increase. The sector overall has witnessed a decline of 3.4% over the same period.Just Released: Zacks Top 10 Stocks for 2025
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PepsiCo, Inc. (PEP) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
