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Analyst Estimates: Here's What Brokers Think Of PepsiCo, Inc. (NASDAQ:PEP) After Its Annual Report

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Simply Wall St
·4 min read
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Last week, you might have seen that PepsiCo, Inc. (NASDAQ:PEP) released its annual result to the market. The early response was not positive, with shares down 5.0% to US$134 in the past week. Revenues of US$70b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$5.12, missing estimates by 3.6%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for PepsiCo

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earnings-and-revenue-growth

Following the latest results, PepsiCo's 17 analysts are now forecasting revenues of US$75.5b in 2021. This would be a modest 7.3% improvement in sales compared to the last 12 months. Per-share earnings are expected to step up 19% to US$6.11. Before this earnings report, the analysts had been forecasting revenues of US$73.3b and earnings per share (EPS) of US$5.97 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$152, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic PepsiCo analyst has a price target of US$169 per share, while the most pessimistic values it at US$135. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting PepsiCo is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the PepsiCo's past performance and to peers in the same industry. It's clear from the latest estimates that PepsiCo's rate of growth is expected to accelerate meaningfully, with the forecast 7.3% revenue growth noticeably faster than its historical growth of 2.2%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 5.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that PepsiCo is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around PepsiCo's earnings potential next year. They also upgraded their revenue forecasts, although the latest estimates suggest that PepsiCo will grow in line with the overall industry. The consensus price target held steady at US$152, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for PepsiCo going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with PepsiCo .

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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