PepsiCo (PEP) posted its fourth-quarter earnings revealing mixed results missing Wall Street expectations with $27.8 billion in revenue versus an expected $28.3 billion, but beating adjusted EPS estimates by reporting $1.78. In addition, the company has raised its annual dividend by 7%.

Yahoo Finance Executive Editor Brian Sozzi joins the Live show to discuss Pepsi's mixed results, what he learned from speaking to PepsiCo Chairman and CEO Ramon Laguarta, and what it all means for the company moving forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

BRAD SMITH: We're also tracking shares of PepsiCo. This morning they're ticking slightly higher after reporting a rare drop in revenue. But there were some bright spots in the quarter as the company posted a beat on profit thanks to lower charges and its continued price hikes. For more on the results, we go to Yahoo Finance executive editor Brian Sozzi. Here with Sozz, you spoke with PepsiCo CEO.

BRIAN SOZZI: Look, investors snacking on shares of PepsiCo, right? Get it?

BRAD SMITH: Yeah, OK.

BRIAN SOZZI: Friday humor? No, OK. Well, anyway this is like an initial--

SEANA SMITH: I liked it.

BRIAN SOZZI: This is initial change because PepsiCo shares initially bid down in response to these results and it made sense. Going through tick by tick, the company missed on sales, North American beverage unit, it's important Frito-Lay division markets. And PepsiCo investors never like to see anything related to any weakness with Frito-Lay.

The Quaker business also had some challenges. Volume declined in all segments and I think inflation, guys, was a little bit stickier than a lot of investors expected. That really impacting a lot of divisions of their business. Whether it's sugar prices, corn prices, whatever it is, I think that weighed on profits by division.

So I caught up with PepsiCo chairman and CEO Ramon Laguarta who we just talked to a couple of weeks ago at Davos. I mean he struck an upbeat tone on the health of the US consumer. Did acknowledge maybe some pockets of weakness, lower income consumers perhaps gravitating towards more affordable, smaller pack sizes, whatever it is, I think he's still optimistic on the consumer this year.

I think I would take this quarter by PepsiCo like this. These are some of the best operators in the entire stock market. So when PepsiCo comes out here and maybe reports a mixed quarter, there was some little concern about the guidance.

How good was that revenue outlook? How good or how high quality was that earnings outlook? They're likely to come out here, trim some expenses this year, get margins to where they need to be, deliver on earnings. Pepsi hates not delivering on its earnings expectations and they really hate not delivering above their earnings expectations.

So not a perfect quarter from the company. Jefferies out with a note this morning saying it was an OK quarter. I would agree with that. But again, the market has taken, I think, a wait and see approach as that conference call rages on.

SEANA SMITH: Brian, what do you think just about their approach to pricing so far? Obviously, they have been forced to raise prices facing those inflationary pressures. But from your conversations, even beyond what you were just talking with PepsiCo here this morning, but how CEOs are kind of walking that fine line, right? They need to raise prices to boost their margins. But then, again they're also a bit handicapped because the consumer, on the other hand, is under pressure.

BRIAN SOZZI: I think the first instinct is, yes, first-- look, all these food companies have raised prices aggressively since the pandemic. They had to because their own costs of doing businesses are going up. They're public companies, they have earnings and investor expectations to meet, whatever it is.

But they have also raised prices by maybe taking a couple of chips out of the bag. I'm not saying PepsiCo necessarily is doing this widespread, but this is what food makers do. It's called shrinkflation. Taking couple chips out of the bag, maybe pumping in a little more air, whatever it is, that is one way for them to raise the price on their products.

I think PepsiCo has really focused this year on small pack sizes and using that as a lever to get a lot of pressure consumers into the business. But by and large, given the inflation that they saw, given some of the pressures that they did see on sales, this wasn't a bad quarter. It was just not one of those good old fashioned blowout Pepsi quarters.