PepsiCo Slashes 2025 Guidance. Is the High-Yield Dividend King Stock a Buy Anyway?

Here's wherefore the fizz has evaporated from Pepsi banal and whether the Dividend King is worthy buying now.

Pepsi reported a 1.8% diminution successful gross and a 4% diminution successful changeless currency net per stock (EPS). Constant currency adjusts for changes successful currency conversions betwixt reporting periods, making it a much close mode to measurement operating results.

The proprietor of respective beverage brands arsenic good arsenic Frito-Lay and Quaker Oats saw level beverage measurement maturation and a 3% diminution successful convenient foods -- illustrating strain connected user demand. The opening punctuation from CEO Ramon Laguarta successful Pepsi's net merchandise was bleak:

Our businesses remained resilient successful the midst of progressively dynamic and analyzable geopolitical and macroeconomic conditions successful the archetypal quarter. As we look ahead, we expect much volatility and uncertainty, peculiarly related to planetary commercialized developments, which we expect volition summation our proviso concatenation costs. At the aforesaid time, user conditions successful galore markets stay subdued and likewise person an uncertain outlook.

In 2025, Pepsi is present guiding for a low-single-digit integrated gross increase, $7.6 cardinal successful dividends, and $1 cardinal successful buybacks. It expects level year-over-year halfway changeless currency EPS compared to anterior guidance of mid-single-digit growth. Core EPS excludes restructuring, acquisition, and one-time costs. All told, Pepsi expects 2025 halfway EPS to diminution by 3% compared to erstwhile guidance for a flimsy increase.

Pepsi attributed 3 factors to its guidance cut: tariffs, macroeconomic uncertainty, and user weakness. On past net calls, Pepsi has discussed balancing quantity and terms by offering much chips per container to thrust worth and boost demand. However, unit connected consumers has intensified. Laguarta said the pursuing connected the call:

What we're seeing is that consumers are giving a batch of worth to implicit dollars now. So clearly, introduction terms points and implicit outlay of wealth per portion is simply a precise important applicable metric. And so, we're putting much accent connected those introduction terms points and making definite that we're not asking for a ample magnitude of wealth for participating successful our brands ... that's wherefore smaller, single-serve, smaller multi-packs, those are each tools for america to support the consumers successful the brand.