Should I buy PepsiCo shares after Q4 results?

PepsiCo, Inc (NASDAQ: PEP) shares continue to trade in a bull market after strong fourth-quarter results.

The new share repurchase program

PepsiCo continues to improve its position in the market, and if you are looking for a solid return potential, shares of this company can be a good choice for long-term investors.

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The company reported better than expected fourth-quarter results this Friday; total revenue has increased by 12.4% Y/Y to $25.25 billion, which was more than expected, while the Non- GAAP EPS was $1.53 (beats by $0.01).

The Frito-Lay North America (+13%), Latin America (+17%), and PepsiCo Beverages North America (+12%) segments all recorded strong growth to offset a slower pace in Africa, Middle East and South Asia (+8%), and Quaker Foods North America (+9%).

The momentum the company achieved during the last several months reflects improved market conditions, combined with adding market share; still, J.P.Morgan sees potential risks for the upcoming quarters mainly due to inflation and supply issues.

The board of directors announced a 7% increase in its annualized dividend to $4.60 per share from $4.30 per share and a new share repurchase program. PepsiCo will repurchase up to $10 billion worth of common shares through February 28, 2026, which is certainly positive news for shareholders.

The company’s management expects a 6% increase in organic revenue for the 2022 fiscal year, while the core earnings per share should be around $6.67. Ramon Laguarta, CEO of PepsiCo, added:

We see our categories very healthy moving into 2022 and long-term, both our convenient foods and beverages. The investments that we have made over the last three years in brands, in more capable go-to-market systems, in more insights, better execution that’s clearly paying off in the form of a share of market gains across multiple developing markets snacks and beverages.

The cash returns to shareholders in the 2022 fiscal year should be approximately $7.7 billion, $6.2 billion in dividends, and share repurchases of $1.5 billion.

PepsiCo’s balance sheet remains stable, the current dividend yield is around 2.6%, and with a market capitalization of $235 billion, shares of this company are fairly valued.

Technical analysis

PepsiCo shares weakened slightly above 2% since the beginning of 2022 year and continue to trade in a bull market.

If the price jumps above $175, it will signal to trade PepsiCo shares, and the next target could be $180.

On the other side, if the price falls below $160 support, it would be a “sell” signal, and we have the open way to $150.

Summary

PepsiCo reported better than expected fourth-quarter results this Friday, and the company’s management expects a 6% increase in organic revenue for the 2022 fiscal year. PepsiCo announced a 7% increase in its annualized dividend to $4.60 per share from $4.30 per share and a new share repurchase program.

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