Back to top

Image: Bigstock

PepsiCo Q3 Preview: Another EPS Beat Inbound?

Read MoreHide Full Article

The Zacks Consumer Staples market has held up better than most in 2022 as consumers continue their spending on essential items, down nearly 14% vs. the S&P 500’s decline of more than 20%.

A widely-known company in the sector, PepsiCo (PEP - Free Report) , is on deck to unveil Q3 earnings on October 12th before the market open.

PepsiCo is a long-established company engaged in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products. We see their snacks and drinks at seemingly every stop.

How does the beverage titan stack up heading into the print? Let’s take a closer look.

Share Performance

PepsiCo shares have been notably defensive in 2022, down roughly 5% and widely outperforming the general market.

Zacks Investment Research
Image Source: Zacks Investment Research

Over the last three months, shares have continued on their market-beating trajectory, down 4.3% vs. the S&P 500’s decline of more than 5%.

Zacks Investment Research
Image Source: Zacks Investment Research

The stronger price action of PEP shares relative to the general market indicates that buyers have defended the stock at a much higher level, undoubtedly a positive in 2022.

Valuation

PEP shares appear somewhat pricey; the company’s 24.3X forward earnings multiple is above its 24.1X five-year median and represents a steep 32% premium relative to its Zacks Consumer Staples sector.

Zacks Investment Research
Image Source: Zacks Investment Research

Further, PepsiCo carries a Style Score of a C for Value.

Quarterly Estimates

Analysts have been bullish for the quarter to be reported, with three upwards earnings estimate revisions coming in over the last several months. The Zacks Consensus EPS Estimate of $1.85 reflects a rock-solid 3.4% Y/Y uptick in earnings.

Zacks Investment Research
Image Source: Zacks Investment Research

PEP’s top line is also in exceptional shape; the Zacks Consensus Sales Estimate of $20.9 billion suggests revenue growth of 3.3% from year-ago quarterly sales of $20.2 billion.

Quarterly Performance & Market Reactions

PEP has consistently exceeded quarterly estimates, beating the Zacks Consensus EPS Estimate in nine of its last ten quarterly prints. Just in its latest print, the beverage titan penciled in a sizable 7.5% bottom line beat.

Top line results have been even more impressive; PepsiCo has chained 16 consecutive revenue beats together. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

The market has had mixed reactions to the company’s recent quarterly reports, with shares moving upwards twice and downwards twice over its last four.

Putting Everything Together

PEP shares have been notably defensive in 2022, edging out the general market across several timeframes.

Shares trade at steep multiples, above their five-year median and Zacks Sector average.

Analysts have been bullish for the quarter to be reported, with estimates suggesting notable growth within revenue and earnings.

Further, the company has repeatedly exceeded quarterly estimates, but the market has had mixed reactions in response to its last four earnings releases.

Heading into the print, PepsiCo (PEP - Free Report) carries a Zacks Rank #3 (Hold) paired with an Earnings ESP Score of 0.4%.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


PepsiCo, Inc. (PEP) - free report >>

Published in