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PepsiCo (PEP) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

PepsiCo (PEP) closed at $128.60 in the latest trading session, marking a -0.67% move from the prior day. This change lagged the S&P 500's daily loss of 0.66%. Meanwhile, the Dow lost 0.34%, and the Nasdaq, a tech-heavy index, lost 1%.

Prior to today's trading, shares of the food and beverage company had lost 3.63% over the past month. This has lagged the Consumer Staples sector's gain of 0.07% and the S&P 500's loss of 1.1% in that time.

Wall Street will be looking for positivity from PEP as it approaches its next earnings report date. This is expected to be October 3, 2019. On that day, PEP is projected to report earnings of $1.50 per share, which would represent a year-over-year decline of 5.66%. Meanwhile, our latest consensus estimate is calling for revenue of $16.97 billion, up 2.93% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.51 per share and revenue of $66.63 billion. These totals would mark changes of -2.65% and +3.05%, respectively, from last year.

Any recent changes to analyst estimates for PEP should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 0.04% higher within the past month. PEP is currently a Zacks Rank #2 (Buy).

Digging into valuation, PEP currently has a Forward P/E ratio of 23.49. Its industry sports an average Forward P/E of 23.49, so we one might conclude that PEP is trading at a no noticeable deviation comparatively.

Meanwhile, PEP's PEG ratio is currently 3.36. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Beverages - Soft drinks stocks are, on average, holding a PEG ratio of 2.45 based on yesterday's closing prices.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 209, putting it in the bottom 19% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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