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

Zacks Equity Research

PepsiCo (PEP) closed at $134.88 in the latest trading session, marking a -1.14% move from the prior day. This change lagged the S&P 500's daily loss of 0.31%. At the same time, the Dow lost 0.52%, and the tech-heavy Nasdaq lost 0.28%.

Prior to today's trading, shares of the food and beverage company had gained 4.38% over the past month. This has outpaced the Consumer Staples sector's gain of 1.67% and the S&P 500's gain of 2.92% in that time.

PEP will be looking to display strength as it nears its next earnings release, which 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 5.97%. Our most recent consensus estimate is calling for quarterly revenue of $16.97 billion, up 2.93% from the year-ago period.

PEP's full-year Zacks Consensus Estimates are calling for earnings of $5.51 per share and revenue of $66.63 billion. These results would represent year-over-year changes of -2.61% and +3.05%, respectively.

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

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. PEP currently has a Zacks Rank of #3 (Hold).

Digging into valuation, PEP currently has a Forward P/E ratio of 24.75. This represents a premium compared to its industry's average Forward P/E of 22.53.

Also, we should mention that PEP has a PEG ratio of 3.54. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Beverages - Soft drinks industry currently had an average PEG ratio of 2.65 as of yesterday's close.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 161, which puts it in the bottom 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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