U.S. markets closed

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

Zacks Equity Research

PepsiCo (PEP) closed at $132.61 in the latest trading session, marking a +1.63% move from the prior day. The stock lagged the S&P 500's daily gain of 3.41%. Meanwhile, the Dow gained 3.44%, and the Nasdaq, a tech-heavy index, added 2.58%.

Prior to today's trading, shares of the food and beverage company had lost 2.73% over the past month. This has was narrower than the Consumer Staples sector's loss of 10.86% and the S&P 500's loss of 10.46% in that time.

PEP will be looking to display strength as it nears its next earnings release, which is expected to be April 28, 2020. On that day, PEP is projected to report earnings of $1.01 per share, which would represent year-over-year growth of 4.12%. Meanwhile, our latest consensus estimate is calling for revenue of $13.17 billion, up 2.18% from the prior-year quarter.

PEP's full-year Zacks Consensus Estimates are calling for earnings of $5.73 per share and revenue of $69.11 billion. These results would represent year-over-year changes of +3.62% and +2.9%, respectively.

It is also important to note the recent changes to analyst estimates for PEP. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 2.62% lower within the past month. PEP currently has a Zacks Rank of #3 (Hold).

Investors should also note PEP's current valuation metrics, including its Forward P/E ratio of 22.77. Its industry sports an average Forward P/E of 18.92, so we one might conclude that PEP is trading at a premium comparatively.

It is also worth noting that PEP currently has a PEG ratio of 3.51. 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. The Beverages - Soft drinks was holding an average PEG ratio of 3.39 at yesterday's closing price.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This industry currently has a Zacks Industry Rank of 91, which puts it in the top 36% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
PepsiCo, Inc. (PEP) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.