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Sunday September 25, 2022



PepsiCo Posts Earnings

PepsiCo, Inc. (PEP) released its latest quarterly earnings report on Tuesday, October 5. The beverage and snack maker posted increased revenue for the quarter, but profits fell.

The company reported quarterly revenue of $20.19 billion, exceeding analysts' estimates of $19.39 billion. This was up from revenue of $18.09 billion at this time last year.

"We are pleased with our results for the third quarter as we delivered very strong net revenue growth while carefully navigating a dynamic and volatile supply chain and cost environment," said PepsiCo's Chairman and CEO, Ramon Laguarta. "Given our year-to-date performance, we now expect our full-year organic revenue to increase approximately 8% and core constant currency earnings per share to increase at least 11%."

PepsiCo reported net income of $2.22 billion for the quarter. This was down from $2.29 billion at this time last year.

The company's PepsiCo Beverages North America segment led the way with sales of $6.40 billion. This was followed by the Frito-Lay North America and Europe segments, with $4.65 billion and $3.61 billion in sales, respectively. The Quaker Foods North America segment generated sales of $618 million for the quarter.

PepsiCo, Inc. (PEP) shares ended the week at $156.03, up 3.4% for the week.

Levi Strauss Releases Earnings Report

Levi Strauss & Co. (LEVI) posted its third quarter earnings on Wednesday, October 6. The iconic blue jean brand reported increased revenue and income for the quarter.

The company reported net revenue of $1.50 billion for the quarter. This was up 41% from $1.06 billion last year at this time.

"We delivered a strong quarter with revenue growth versus pre-pandemic 2019 levels, despite a more difficult macro-environment than we expected," said Levi Strauss & Co. CEO Chip Bergh. "These results reflect the strength of the Levi's brand, improving momentum in our direct-to-consumer business and the scale and agility of our supply chain network where we have executed against macro-headwinds exceptionally well."

Levi Strauss posted net income of $193 million during the quarter. This was up from $27 million during the same quarter last year.

The San Francisco-based company reported that revenue for the Americas jumped 52% from last year. In Europe and Asia revenue increased 27% and 34%, respectively. For the fourth quarter, the company expects an increase in revenue between 20% and 21% from the prior year. The company recently acquired the Beyond Yoga apparel brand with the goal of diversifying its business into the fast growing activewear market.

Levi Strauss & Co. (LEVI) shares ended the week at $25.55, up 1% for the week.

Conagra Foods Reports Quarterly Results

Conagra Foods, Inc. (CAG) announced its first quarter results on Thursday, October 7. The company's results were largely in line with expectations.

The company reported revenue of $2.65 billion during the first quarter. This is down from last year's same quarter revenue of $2.68 billion.

"First, as everyone is aware, the external environment is incredibly dynamic right now, and we see many of these challenges persisting," said Conagra Foods President and CEO Sean Connolly. "But despite the complex operating situation, the ongoing dedication, resilience and agility of our team enabled us to deliver solid Q1 results on the back of strong sales. We continue to benefit from our proven approach to brand building and the breadth of investments we're making to increase consumer demand."

For the quarter, Conagra reported a profit of $235.4 million, or $0.50 on an adjusted per share basis, exceeding analysts' estimates of $0.49. This is down 28.5% from net income of $329.0 million, or $0.70 on an adjusted per share basis, reported during the comparable period last year.

The packaged foods company, which holds popular brands such as Duncan Hines, Healthy Choice and Slim Jim, reaffirmed its adjusted earnings per share guidance of $2.50. Despite concerns that inflation may be greater than forecasted, the company reported better-than-expected consumer demand due to a rise in at-home eating brought about by a shrinking workforce and a rise in remote work. This demand has been particularly salient and enduring for the snack foods segment. The company recently announced a quarterly dividend of $0.31 per share.

Conagra Foods, Inc. (CAG) shares ended the week at $33.72, relatively unchanged for the week.

The Dow started the week of 10/4 at 34,313 and closed at 34,746 on 10/8. The S&P 500 started the week at 4,349 and closed at 4,391. The NASDAQ started the week at 14,493 and closed at 14,580.

Treasury Yields Increase

Treasury yields climbed to the highest levels since June as lawmakers reached an agreement to increase the debt ceiling and jobless claims decreased. On Friday, yields initially dipped but quickly rebounded after news that September job creation fell short of expectations.

On Thursday, the Labor Department's weekly jobless claims data showed a drop in initial claims to 326,000, down from 364,000 the prior week and below analysts' estimates of 345,000. Continuing claims fell by 97,000 to 2.71 million, the lowest number since March 14, 2020.

"While there are some encouraging signs that the worst may have passed with the Delta variant of COVID-19, which took wind out of the proverbial sails of the economic recovery, supply chain challenges and rising prices persist with no immediate sign of substantial resolution or improvement," said Bankrate senior economic analyst Mark Hamrick. "Cargo ships unable to head to West Coast ports, a trucker shortage and lack of sufficient rail capacity are among the complicating factors all conspiring to boost product and component bottlenecks when retailers are very much focused on the holiday shopping season."

The benchmark 10-year Treasury note yield opened the week at 1.463% and reached 1.615% during trading on Friday. The 30-year Treasury bond yield opened at 2.031% on Monday and rose to 2.179% during trading on Friday.

On Friday, the Labor Department reported that 194,000 non-farm payroll jobs had been created in September, falling short of the 500,000 predicted by analysts. The report revised job gains in August up to 366,000 from the previous estimate of 235,000. The unemployment rate fell to 4.8%, its lowest rate since the spring of 2020.

"After looking like almost a done deal, today's jobs number has thrown expectations for tapering into disarray," said Principal Global Investors chief strategist Seema Shah. "The Fed doesn't seem to need much to convince it that tapering should begin imminently, but at just 194,000, jobs numbers are suggesting that the labor market is further from hitting the substantial progress goal than they expected."

The 10-year Treasury note yield closed at 1.61% on 10/8, while the 30-year Treasury bond yield was 2.17%.

Mortgage Rates Decrease

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, October 7. Mortgage rates decreased slightly from the prior week.

The 30-year fixed rate mortgage averaged 2.99%, down from last week's average of 3.01%. During the same time last year, the 30-year fixed rate mortgage averaged 2.87%.

This week, the 15-year fixed rate mortgage averaged 2.23%, down from 2.28% last week. Last year at this time, the 15-year fixed rate mortgage averaged 2.37%.

"Mortgage rates continue to hover at around 3% again this week due to rising economic and financial market uncertainties," said Freddie Mac's Chief Economist Sam Khater. "Unfortunately, with the expectation that both mortgage rates and home prices will continue to rise, competition remains high and housing affordability is declining."

Based on published national averages, the savings rate was 0.06% as of 9/20. The one-year CD averaged 0.14%.

Published October 8, 2021
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