Editors' pick: Originally published Sept. 30, 2016.
A contentious U.S. presidential election cycle is nearing an end and the Federal Reserve could hike interest rates at one of its final two policy meetings for the year. Yet, beverage and snack giant PepsiCo (PEP) still sees smooth sailing ahead despite the threat of a more volatile stock market and global economy in the wake of each major event's outcome.
On Thursday, PepsiCo hiked its full-year profit outlook for the second time this year. It now forecasts full-year earnings of $4.78 a share, up from $4.71 a share previously.
"We have built a product portfolio to weather these challenges -- whether it's the innovation capabilities that we have built, the advertising increases or the productivity that we are driving we just have the classic virtuous cycle working inside PepsiCo right now," explained PepsiCo Vice Chairman and CFO Hugh Johnston in an interview when asked why the company has such confidence in its outlook. He added, "We have pretty good geographic balance, too."
It's hard to argue with Johnston's sense of confidence. The combination of low inflation, cost-cutting and the world's love affair for snacking continued to fuel PepsiCo during the third quarter. The beverage and snack giant blew away analysts' earnings estimates for the second straight quarter, posting fiscal third-quarter earnings excluding one-time items of $1.40 a share vs. forecasts for $1.32 a share. Net revenue fell 2% from the prior year to $16.0 billion but topped forecasts for $15.84 billion.