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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 $139.15, marking a +1.23% move from the previous day. The stock outpaced the S&P 500's daily gain of 1.08%. Meanwhile, the Dow gained 0.91%, and the Nasdaq, a tech-heavy index, added 1.31%.

Prior to today's trading, shares of the food and beverage company had gained 8.71% over the past month. This has outpaced the Consumer Staples sector's gain of 0.85% and the S&P 500's loss of 0.68% in that time.

Investors will be hoping for strength from PEP as it approaches its next earnings release, which is expected to be October 3, 2019. In that report, analysts expect PEP to post earnings of $1.50 per share. This would mark 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.

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.

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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 is currently a Zacks Rank #2 (Buy).

Valuation is also important, so investors should note that PEP has a Forward P/E ratio of 24.94 right now. For comparison, its industry has an average Forward P/E of 22.11, which means PEP is trading at a premium to the group.

It is also worth noting that PEP currently has a PEG ratio of 3.57. 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. PEP's industry had an average PEG ratio of 2.7 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 151, putting it in the bottom 42% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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