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PepsiCo (PEP) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3-min read

PepsiCo (PEP) closed at $130.81 in the latest trading session, marking a +0.82% move from the prior day. This move lagged the S&P 500's daily gain of 1.48%. Meanwhile, the Dow gained 2.21%, and the Nasdaq, a tech-heavy index, added 0.77%.

PEP will be looking to display strength as it nears its next earnings release, which is expected to be July 13, 2020. On that day, PEP is projected to report earnings of $1.25 per share, which would represent a year-over-year decline of 18.83%. Our most recent consensus estimate is calling for quarterly revenue of $15.68 billion, down 4.65% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.32 per share and revenue of $67.59 billion, which would represent changes of -3.8% and +0.64%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for PEP. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

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Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 6.15% lower within the past month. PEP is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that PEP has a Forward P/E ratio of 24.38 right now. This valuation marks a premium compared to its industry's average Forward P/E of 21.74.

We can also see that PEP currently has a PEG ratio of 4.96. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PEP's industry had an average PEG ratio of 4.48 as of yesterday's close.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 128, putting it in the top 50% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow PEP in the coming trading sessions, be sure to utilize Zacks.com.


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Zacks Investment Research