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

Zacks Equity Research

In the latest trading session, PepsiCo (PEP) closed at $132.21, marking a -0.17% move from the previous day. This change lagged the S&P 500's daily gain of 1.2%. Meanwhile, the Dow gained 1.7%, and the Nasdaq, a tech-heavy index, added 1.13%.

Wall Street will be looking for positivity from PEP as it approaches its next earnings report date. This is expected to be July 13, 2020. The company is expected to report EPS of $1.25, down 18.83% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $15.68 billion, down 4.65% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.32 per share and revenue of $67.59 billion, which would represent changes of -3.8% and +0.64%, respectively, from the prior year.

Any recent changes to analyst estimates for PEP should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 has moved 1.14% lower within the past month. PEP is currently a Zacks Rank #3 (Hold).

In terms of valuation, PEP is currently trading at a Forward P/E ratio of 24.88. Its industry sports an average Forward P/E of 23.72, so we one might conclude that PEP is trading at a premium comparatively.

Investors should also note that PEP has a PEG ratio of 5.06 right now. 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 4.67 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 67, which puts it in the top 27% 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.


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