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Lockdown snacking: Lots to munch on when PepsiCo reports results

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Nivedita Balu
·2 min read
FILE PHOTO: Bottles of Pepsi are pictured at a grocery store in Pasadena
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By Nivedita Balu

(Reuters) - Will people break their lockdown snacking habit once the pandemic eases?

PepsiCo Inc's results on Thursday will give investors a glimpse of how widespread vaccinations impacted snack sales at the soda giant.

The company's snacks as well as its healthier options such as Off the Eaten Path have seen brisk sales during the pandemic, helping offset a weak market for sodas in some international markets due to fewer social events and limited openings of theaters and restaurants.

"We would expect the majority of investor focus to be less around the quarter and more likely pacing for the rest of the year," J.P.Morgan analyst Andrea Teixeira said.

Rival Coca-Cola - which is more reliant on a return to normalcy due to its heavy dependence on soda sales, especially to theaters, restaurants and social events - will report on April 19.

"A lot of people are really underestimating the potential for millions of people working from home ... This increases number of food occasion at home, especially breakfast and snacking, which is right in PepsiCo's wheelhouse," Edward Jones analyst John Boylan said.

THE CONTEXT

An intense vaccination drive, a gradual reopening of the economies and an eagerness to return to pre-pandemic lifestyle raise questions on whether the current snacking trend will continue.

Prices are rising for raw materials, transportation and other input costs and investors will look at PepsiCo's plans to tackle these expenses. Some like Kraft Heinz Co and Conagra Brands Inc are already considering price hikes.

Graphic: At-home snacking powers PepsiCo's sales https://graphics.reuters.com/PEPSICO-RESULTS/dgkvlydxqpb/chart.png

THE FUNDAMENTALS

* PepsiCo Inc is expected to report a 4.8% increase in first-quarter revenue to $14.55 billion when it reports results on April 15, according to the mean estimate from 14 analysts, based on Refinitiv data.​

* The analyst mean estimate for earnings is $1.12 per share. For the same quarter last year, the company reported earnings of $1.07 per share.

WALL STREET SENTIMENT

* The current average analyst rating on shares is "buy" and the breakdown of recommendations is 13 "strong buy" or "buy," 9 "hold" and 1 "strong sell."

* Wall Street's median 12-month price target is $154.

* The company's shares have lost 3.5% so far this year, after gaining about 9% in 2020. ​​​

(Reporting by Nivedita Balu in Bengaluru; Editing by Anil D'Silva)