Fossil (FOSL) Jumps 80% While PepsiCo (PEP) Stumbles on Flat Sales

Amid the up and down movement of the markets, a few stocks are having notable trading. Two of those are Fossil (FOSL) and PepsiCo; both have made the news for two divergent reasons.

Fossil (FOSL) was dominating the headlines on Wednesday after the stock exploded 80% on positive earnings news. FOSL reported spectacular earnings per share of 64 cents on revenue of $929.8M. Wall Street had predicted earnings per share of 38 cents and projected revenue of $889.7M; FOSL proved everyone wrong and obliterated these numbers.

Driving sales for FOSL was its wearables division. The company said sales of wearables grew 40% year over year for the fourth quarter. The strong sales in the division are part of a larger sales growth story for wearables. Since coming on stream, this area of FOSL’s business has grown from strength to strength. Over the course of 2017 wearables almost doubled to surpass the $300M mark. Wearables now account for 14% of FOSL’s total watch sales.

In trading on Wednesday, investors let their voices heard unanimously. They reached in and helped drive FOSL more than 80% higher. By the close of play the stock had closed up 87.72%, adding $7.93 to finish the day at $16.97. FOSL reached as high as $18 in trading on Wednesday and has now given itself a higher profile on Wall Street.

PepsiCo (PEP) didn’t fair quite as well on Wednesday. After posting flat earnings for the fourth quarter 2017, analysts and investors did their best to hide disappointment. Things weren’t helped by PEP’s announcement that it plans to lay off workers while handing out bonuses of up to $1,000.00 for some workers.

PEP made it clear that the layoffs will affect only corporate employees, employees which in relative terms represent less than 1% of its total workforce of more than 110,000 people. The drinks maker also pointed out that the bonuses will go to those who make snacks and drinks and by extension those who deliver these snacks and drinks. This will be good news for Wall Street as the idea that bonuses are being paid while jobs are being cut may be seen as cynical by some.

PEP also plans to pay out a dividend. The company said that it plans to use the tax savings accruing under Trump’s new tax regime to increase dividends by up to 15%. PEP’s share buyback program will also be increased from the existing $12M to $15M.

Investors reacted largely in a negative way to the news that PEP had reported a loss of $710M or 50 cents a share for Q4 2017. As a result of the poor numbers the stock traded down on Wednesday, closing 2.70% to finish the day down $3.03 and closing at $109.11. PEP has seen bigger numbers and has a 52-week high of $122.51; the corresponding 52-week low for PEP is $104.77. Analysts have set a one-year target of $125.09 for the stock.

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