Weekly Earnings Outlook

Update 16 October

The German footwear company Birkenstock held its debut (Initial Public Offering) on the New York Stock Exchange on October 11, 2023. The company sold 32 million shares at $46 per share, raising $1.48 billion, giving it a market capitalization of $8.64 billion.

The IPO, priced below the midpoint of the marketed range of $44 to $49, was seen as a sign of the company’s cautiousness, given the choppy markets at the time. However, Birkenstock’s shares fell sharply on their first day of trading, closing down 12.6% at $40.20; the worst first-day showing for a US listing of $1 billion or more in over two years.

Birkenstock is a 249-year-old company known for its comfortable and supportive sandals. The company has seen a surge in popularity in recent years as consumers have become more interested in comfort and sustainability. It is too early to say whether Birkenstock’s IPO will be a success. The company’s shares will need to perform well in the long term in order to justify its valuation.

PSG Financial Services Limited (JSE: KST)

PSG Financial Services Limited (PSG) released its earnings results for the half-year ending on August 31, 2023, on October 11, 2023. These figures provide a glimpse into PSG’s remarkable financial performance, painting a picture of growth and strength in the financial sector.

Demonstrating its ability to maintain and substantially expand its income stream, the company recorded an increase in revenue, surging to ZAR 2,909.81 million, a significant jump from the ZAR 2,526.4 million reported during the same period in the previous year. In tandem with its burgeoning revenue, PSG also showcased growth in net income. The institution reported a net income of ZAR 482.41 million, an improvement from the ZAR 408.68 million registered in the prior year.

Shareholders and investors will be particularly pleased with PSG’s recurring headline earnings per share performance. This crucial metric saw an uptick, with earnings per share reaching 37.6 cents, up from 31.0 cents in the prior year. Another significant development in PSG’s financial performance is the declaration of an interim gross dividend. PSG has declared a dividend of 13.5 cents per share, marking a rise from the 11.0 cents per share in the prior year.

Behind these impressive figures lies the driving force of PSG’s success – its three core business units: PSG Wealth, PSG Asset Management, and PSG Insure. PSG Wealth, for instance, reported a substantial 18% increase in assets under management, reaching an impressive R325.6 billion. The surge is attributed to net inflows of R9.5 billion. Meanwhile, PSG Asset Management also made significant strides, reporting a 20% increase in assets under management, now totaling R50.3 billion. PSG Insure, the third pillar of PSG’s success, reported a 12% increase in gross written premiums, reaching R3.4 billion.

PepsiCo, Inc. (NSDQ: PEP)

PepsiCo reported strong third-quarter earnings on October 10, 2023, benefiting from strong consumer demand and its diversified product portfolio. The company beat expectations on both the top and bottom lines. Core earnings per share were $2.25, up 13% year-over-year. Net revenue was $23.45 billion, up 6.7% year-over-year.

The strong results were driven by higher organic revenue growth, which was 8.8% year-over-year. Organic revenue growth excludes acquisitions and divestitures. PepsiCo’s beverage business grew 7.5% year-over-year, led by strong growth in Pepsi, Gatorade, and Mountain Dew. The company’s snack business grew 10.5% year-over-year, led by strong growth in Lay’s, Doritos, and Cheetos.

PepsiCo raised its full-year earnings outlook. The company now expects core earnings per share to be $7.54, up from $7.47 previously.

Sources: Financial Times; Sens; Bloomberg; PepsiCo

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