How has PepsiCo's EPS performed compared to Kraft Heinz?

PepsiCo's EPS grew 48% from 2020 to 2024, while Kraft Heinz's EPS stagnated during the same period.

Is Kraft Heinz's dividend sustainable?

Kraft Heinz's current dividend is not covered by its negative trailing twelve-month earnings per share of -$3.71.

What is the main reason for PepsiCo's higher gross margin than Kraft Heinz?

PepsiCo's higher gross margin of 53.6% reflects strong pricing power, whereas Kraft Heinz faces private label competition, resulting in a 31.9% margin.

Home / Business and Economy / PepsiCo Soars, Kraft Heinz Stumbles

PepsiCo Soars, Kraft Heinz Stumbles

1 Jan

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Summary

PepsiCo's EPS grew 48% while Kraft Heinz stagnated.
Kraft Heinz dividend is uncovered by negative EPS.
PepsiCo boasts 53.6% gross margin; Kraft Heinz faces pressure.

PepsiCo and Kraft Heinz recently reported Q3 earnings, revealing starkly different financial health and growth prospects. PepsiCo's earnings per share (EPS) have climbed an impressive 48% between 2020 and the present, with its Q3 revenue reaching $23.94 billion, bolstered by a robust 53.6% gross margin reflective of strong pricing power across its popular snack and beverage brands. Operating income for PepsiCo stood at $3.57 billion.

Kraft Heinz, while beating earnings estimates for its fourth consecutive quarter, posted flat revenue of $6.24 billion and a significantly lower gross margin of 31.9%, pressured by private label competition. Since 2021, its annual EPS has remained stagnant, hovering between $2.78 and $3.06. The company's operating income was $1.03 billion, and its recent trailing twelve-month EPS of negative $3.71 means its dividend is not covered by earnings.

The divergence is also evident in market capitalization and capital allocation. PepsiCo, with a market cap of $197.5 billion, demonstrates superior capital deployment with a 37.2% return on equity, contrasting with Kraft Heinz's negative 9.69% ROE. PepsiCo's long history as a Dividend Aristocrat, with 50 consecutive years of increases and a sustainable yield, further underscores its financial stability compared to Kraft Heinz, which has frozen its dividend and faces secular headwinds in its legacy portfolio.