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PepsiCo (PEP) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

PepsiCo (PEP) closed the most recent trading day at $133.99, moving +1.18% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.77%. Elsewhere, the Dow gained 0.67%, while the tech-heavy Nasdaq added 0.75%.

Heading into today, shares of the food and beverage company had gained 2.6% over the past month, lagging the Consumer Staples sector's gain of 6.02% and the S&P 500's gain of 8.19% in that time.

Investors will be hoping for strength from PEP as it approaches its next earnings release, which is expected to be July 9, 2019. The company is expected to report EPS of $1.49, down 7.45% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $16.39 billion, up 1.86% 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 $66.47 billion. These totals would mark changes of -2.65% and +2.8%, respectively, from last year.

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

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.

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 has moved 0.05% lower. PEP is currently a Zacks Rank #3 (Hold).

Looking at its valuation, PEP is holding a Forward P/E ratio of 24.04. For comparison, its industry has an average Forward P/E of 24.44, which means PEP is trading at a discount to the group.

It is also worth noting that PEP currently has a PEG ratio of 3.44. 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 2.2 at yesterday's closing price.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 215, putting it in the bottom 17% 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.

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


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