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Ambev: Q1 Earnings Snapshot

Ambev: Q1 Earnings Snapshot

Washington Post08-05-2025

SAO PAULO — SAO PAULO — Ambev SA (ABEV) on Thursday reported first-quarter earnings of $648.8 million.
The Sao Paulo-based company said it had profit of 4 cents per share.
The beverage company posted revenue of $3.84 billion in the period.
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This story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on ABEV at https://www.zacks.com/ap/ABEV

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PepsiCo Inc: A Quiet Giant with More Firepower Than the Market Thinks
PepsiCo Inc: A Quiet Giant with More Firepower Than the Market Thinks

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PepsiCo Inc: A Quiet Giant with More Firepower Than the Market Thinks

PepsiCo might not turn heads the way high-growth tech stocks do, but in the backdrop of inflation shocks, tightening monetary policy, and consumer uncertainty, it's the type of company that quietly keeps delivering. The market may not be giving it full credit, but underneath the surface, PepsiCo is a resilient cash-flow machine a diversified global operator with iconic brands and pricing power that's often underestimated. While competitors like Coca-Cola, Monster Beverage, and Keurig Dr Pepper dominate narrower categories or sport flashier growth stories, PepsiCo's strength lies in its balance across beverages and snacks, geographies and channels. PepsiCo's Q1 2025 earnings didn't cause a stir but that doesn't mean there's nothing to see. The company reported $18.25 billion in revenue, nudging up about 2.5% from a year ago. Most of that lift came from raising prices, not selling more. In fact, volume actually slipped by 2%, as shoppers, feeling the pinch from higher costs, started pulling back a bit. Core earnings per share ticked up to $1.58 just a 1% gain, but still in the black. The stronger U.S. dollar was a drag, trimming around 3% off the top and bottom lines. It's a recurring theme for PepsiCo, with so much of its sales happening outside North America. Frito-Lay North America continued to deliver, posting higher revenue and better margins. The gains came from adjusting product mix and trimming costs nothing flashy, just smart execution. Beverages didn't move the needle as much, but the segment held its ground. Demand for zero-sugar and health-focused drinks helped cushion slower volume trends. PepsiCo's dividend currently runs at $5.69 a share per year, giving it a yield of around 4.35% one of the highest among its peers. They've raised that payout every year for more than five decades. In 2024, they returned north of $8.5 billion to investors through dividends and buybacks not a flashy move, but consistent with how they've always handled capital. To get a sense of what the market thinks, it helps to see who owns the shares. When it comes to PepsiCo, it's mostly big-name institutional investors. Vanguard owns just under 9%. BlackRock's in for more than 8%. State Street? Over 4%. These aren't hedge funds chasing the next shiny thing they're the experienced institutional investors managing retirement plans, pensions, and endowments. This kind of backing doesn't happen by accident. It means the large, patient investors crowd sees PepsiCo as a reliable piece of the puzzle. Not exciting, maybe, but solid and in a shaky market, that counts for a lot. Now, flip to the inside. Executive ownership is low nothing unusual there for a company this size. CEO Ramon Laguarta and other top execs hold a minimal slice, mostly tied to equity compensation. Recent insider trades? Mostly pre-planned, automatic sales. No red flags. Name Hold Type Vanguard Group Inc 9.86% Institution BlackRock Inc 8.26% Institution State Street Corp 4.19% Institution JPMorgan Chase Co 2.58% Institution Geode Capital Management LLC 2.38% Institution Insider Ownership (e.g., CEO Ramon Laguarta) <1% Insider At first glance, PepsiCo's valuation may seem steep, especially relative to growth. But when placed next to its peers, a clearer picture starts to emerge. PepsiCo is currently trading at a forward P/E of 20.8, an EV/EBITDA of 16.2, and a price-to-sales ratio of 2.7. On the surface, those figures suggest a modest premium. But when you break it down, that premium is tied to a more diversified revenue model and better defensive positioning. Coca-Cola, for example, trades at a forward P/E of 21.2, an EV/EBITDA of 18.3, and a P/S ratio of 6.1 considerably higher in terms of sales multiple, despite a narrower product focus. Monster Beverage, the favorite among momentum investors of the sector, sports a P/E of 29.5, EV/EBITDA of 24.4, and a P/S north of 7.4. Keurig Dr Pepper comes in at a P/E of 19.1, an EV/EBITDA of 14.6, and a P/S of 3.2 more modest, but reflective of its smaller scale and regional concentration. What this tells us is that PepsiCo sits in a reasonable valuation relative to its strengths. It's not priced like a pure-play growth stock, but it's also not treated like a business that's stopped evolving. Its reflects its ability to weather storms and grow, modest growth, and consistent capital returns and compared to Coke's lofty sales multiple or Monster's dependence on one category, that's not a bad deal. Company P/E EV/EBITDA P/S PepsiCo 20.8 16.2 2.7 Coca-Cola 21.2 18.3 6.1 Monster 29.5 24.4 7.4 Keurig Dr Pepper 19.1 14.6 3.2 PepsiCo operates in a sector that's as saturated as it is scrutinized, and while it brings scale and diversification, the specific moves and strengths of its key competitors may be skewing investor sentiment and weighing on its valuation. Coca-Cola's 46%+ market share in carbonated soft drinks dwarfs Pepsi's \~25%, and its international dominance only widens that gap. Its highly integrated bottling network, deeper brand penetration, and global consistency make it a more "pure-play" beverage investment and that singular focus tends to earn it a valuation premium. Monster Beverage, meanwhile, controls about 40% of the U.S. energy drink market, operates with sky-high margins over 30%, and continues to expand globally. PepsiCo's energy portfolio Rockstar, Celsius, and other partners still hasn't cracked the top tier. That gap in profitability alone is a reason some growth investors lean toward MNST instead of the blended PepsiCo model. Keurig Dr Pepper is also playing a different game. With an EBITDA margin near 28% and a firm position in the market on the at-home beverage category through Keurig brewers, it's more nimble, more focused, and doesn't have the global FX drag that PepsiCo faces. Dividend strategy is another competitive signal. PepsiCo's forward yield of 4.35% is the highest among peers, backed by a 53-year streak of increases. Coca-Cola offers 2.83% with a 63-year streak, while Keurig Dr Pepper offers 2.73%. Monster doesn't pay a dividend at all. This not only positions PepsiCo as a stable income source, but highlights show its potential as a stable income generator may be compared to growth-focused peers. PepsiCo's business, while steady, has its share of pressure points. One of the most immediate challenges is tariff exposure. The company relies on soda concentrate imports from Ireland, now subject to a 10% tariff, and also faces a 25% import tax on aluminum both of which inflate production costs. In Q1 2025, PepsiCo lowered its full-year earnings guidance, citing these pressures directly. Consumer behavior is also shifting. Inflation-weary shoppers are trading down, cutting into volume even as prices rise. In Q1, organic volumes dropped 2% despite a 3% average pricing lift signaling that consumers are beginning to push back on price. Regulatory challenges are also bubbling up. The FDA is pushing to phase out several food dyes and additives used in products like Cheetos, which could require reformulations and carry additional R\&D and marketing costs. Currency risk remains a ongoing challenge. A stronger U.S. dollar trimmed roughly 3% from revenue and EPS growth last quarter. With over 40% of its sales coming from outside North America, FX volatility is a real constraint. Add in competitive pressure, rising interest rates, and the need for ongoing innovation and the road ahead, while manageable, is far from frictionless. PepsiCo isn't chasing headlines. It's not the flashiest stock in consumer staples, nor is it trying to be. What it does offer, though, is a rare combination of global scale, diversified revenue streams, and durable brand equity and right now, it may not be getting full credit for that. Competitors like Coca-Cola, Monster, and Keurig Dr Pepper each have clear advantages in focus, speed, or category dominance. But what PepsiCo brings is balance and that balance becomes more valuable when volatility creeps in. The risks are visible: tariffs, shifting consumer tastes, FX pressure, regulatory noise but the playbook to manage them is already in motion. If PepsiCo continues executing on cost controls, pivots faster toward health-conscious innovation, and leverages its international footprint smartly, the market's current hesitation could look like a missed opportunity in hindsight. This isn't a turnaround story or a moonshot growth play. It's a global consumer machine priced like a regional challenger. And that disconnect between performance and perception is where long-term value investors may want to start paying attention. This article first appeared on GuruFocus. Sign in to access your portfolio

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