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

Zacks Equity Research

In the latest trading session, PepsiCo (PEP) closed at $130.72, marking a +1.24% move from the previous day. This move outpaced the S&P 500's daily gain of 0.25%. Meanwhile, the Dow gained 0.39%, and the Nasdaq, a tech-heavy index, lost 0.09%.

Coming into today, shares of the food and beverage company had lost 2.76% in the past month. In that same time, the Consumer Staples sector lost 1.65%, while the S&P 500 lost 5.58%.

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 5.66%. Our most recent consensus estimate is calling for quarterly revenue of $16.97 billion, up 2.93% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.51 per share and revenue of $66.63 billion, which would represent changes of -2.65% and +3.05%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for PEP. These revisions help to show the ever-changing nature of 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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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 remained stagnant within the past month. PEP currently has a Zacks Rank of #2 (Buy).

Looking at its valuation, PEP is holding a Forward P/E ratio of 23.42. This valuation marks a premium compared to its industry's average Forward P/E of 22.48.

Meanwhile, PEP's PEG ratio is currently 3.35. 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. PEP's industry had an average PEG ratio of 2.68 as of yesterday's close.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 109, putting it in the top 43% 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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