PepsiCo (PEP) is scheduled to report Q1 results tomorrow, following Coca-Cola's (KO) Q1 earnings report.

PEP is expected to post adjusted EPS growth of 7.8% year-over-year to $1.39 and sales growth of 6.6% to $17.27 billion.

While PEP and KO have similar overseas exposure, PEP's Frito-Lay and Quaker businesses have underperformed its beverage lines. PEP's highest-margin business is Frito-Lay, which is expected to grow close to 18% in FY23. The snack food category has seen sustained growth, which is a promising sign for PEP's snack food brands.

Keys:

  • Frito-Lay is PEP's highest-margin business, expected to grow close to 18% in FY23

  • Quaker is PEP's smallest business and not as important to see robust volume growth

  • Snack food category has seen sustained growth, a promising sign for PEP's snack food brands

TECHS:


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