PepsiCo stock soars as high-profile ad spending delivers strong 3Q results

PepsiCo Inc (NASDAQ:PEP) saw it shares surge Thursday even amid an widespread market drop after the company beat third-quarter earnings and revenue estimates thanks in part to an aggressive ad blitz. 

The food and beverage giant ramped up advertising spending by 12% this year on campaigns for its Pepsi colas, Mountain Dew, Gatorade and other products, according to a report from Reuters.

The company has partnered up with stars like Chrissy Tiegen, and recently launched a campaign in conjunction with the 100th anniversary of the NFL.

Investors responded strongly, boosting Pepsi shares 3.2% to $138.16 in morning trade.

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“The increased advertising that we have is causing consumers to shop us more aggressively, and our customers are rewarding us with that [grocery] space because they know that we can help them grow,” CFO Hugh Johson said on CNBC.

The company posted earnings of $1.56 per share on revenue of $17.19 billion, easily surpassing estimates of $1.50 per share and $16.93 billion, respectively.

Pepsi’s healthier options noticeably did well, including sugar-free Gatorade Zero, which topped $500 million in retail sales since launching in May. 

In addition, Johnson expects Bubly — a sparkling water competitor to La Croix — to become the company’s next $1 billion brand. 

Overall, North America beverage sales rose 3.4% to $5.64 billion.

Contact Andrew Kessel at [email protected] 

Follow him on Twitter @andrew_kessel

Story by ProactiveInvestors