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

Zacks Equity Research
·3-min read

PepsiCo (PEP) closed the most recent trading day at $132.85, moving +0.37% from the previous trading session. This move lagged the S&P 500's daily gain of 0.45%. At the same time, the Dow added 0.36%, and the tech-heavy Nasdaq gained 0.52%.

Heading into today, shares of the food and beverage company had lost 0.35% over the past month, lagging the Consumer Staples sector's gain of 0.07% and the S&P 500's gain of 2.08% in that time.

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. On that day, PEP is projected to report earnings of $1.25 per share, which would represent a year-over-year decline of 18.83%. Meanwhile, our latest consensus estimate is calling for revenue of $15.75 billion, down 4.26% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.31 per share and revenue of $67.68 billion. These totals would mark changes of -3.98% and +0.77%, respectively, from last 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. With this in mind, we can consider positive estimate revisions a sign of optimism about 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.23% lower within the past month. PEP currently has a Zacks Rank of #3 (Hold).

Digging into valuation, PEP currently has a Forward P/E ratio of 24.93. For comparison, its industry has an average Forward P/E of 21.71, which means PEP is trading at a premium to the group.

Investors should also note that PEP has a PEG ratio of 5.07 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Beverages - Soft drinks was holding an average PEG ratio of 5.07 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 92, which puts it in the top 37% 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.

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


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