New York
Fizzy drinks and snacks giant PepsiCo has “delivered decent quarterly results and a cautiously optimistic outlook”, says Aaron Back in The Wall Street Journal. Organic sales, which exclude the effects of currency movements and mergers, rose 8.8% year on year in the third quarter, while earnings per share also beat estimates, rising 15%. But look a little closer and “the results weren’t quite as strong as they seemed”. Underlying organic volumes actually fell 2.5% in the quarter from a year earlier, “meaning that revenue growth came entirely from price increases”. That can’t go on forever, and investors fear hard-pressed consumers are already cutting back. Rising interest rates are another concern. Traditionally, consumer-staples companies appeal to investors as “dividend plays” thanks to the steady stream of income they offer shareholders. But with the yield on a ten-year Treasury bond reaching 4.78% on Monday, “PepsiCo’s 3.1% [dividend] yield [looks] more paltry by the
