We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
PepsiCo (PEP) Gears Up for Q3 Earnings: Is a Beat in Store?
Read MoreHide Full Article
We expect food/beverage giant PepsiCo, Inc. (PEP - Free Report) to beat expectations when it reports third-quarter fiscal 2017 results on Oct 4, before market open. Last quarter, the company delivered a positive earnings surprise of 7.91%. The company also surpassed expectations in each of the trailing four quarters, the average beat being 5.18%. Let’s see how things are shaping up prior to this announcement.
Our proven model shows that PepsiCo is likely to beat earnings because it has the right combination of two key components.
Zacks ESP: PepsiCo has an Earnings ESP of +0.27%. The Most Accurate Estimate for the current quarter is currently at $1.43 per share for PEP compared to a broader Zacks Consensus Estimate of $1.42 per share. A favorable Zacks ESP serves as a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PepsiCo currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates. Conversely, stocks with a Zacks Rank #4 or 5 (Sell rated) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
The combination of PepsiCo’s favorable Zacks Rank and a positive ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-Than-Expected Earnings?
PepsiCo has delivered revenue growth in the past three quarters banking on significant innovation, continued momentum in Frito-Lay business, revenue management strategies, along with better market execution. Moreover, it has been witnessing higher volumes and profits in the North American segments due to an improving economy, better industry pricing dynamics and a consistency in positive innovation.
Health awareness has been prime concern for consumers in recent times and capitalizing on this trend can prove to be beneficial for any beverage company in 2017. Keeping this in mind, PepsiCo is gradually reshuffling its portfolio toward healthier Everyday Nutrition Products and the company believes that such products will play an important role in the long-term growth.
That said, consumer tastes are rapidly shifting from carbonated soft drinks (CSDs) to non-carbonated beverages. Hence, sluggish CSD volumes are pressing concerns for this beverage giant as well as for other nonalcoholic beverage companies.
Again, adverse currency movements continued to negatively impact the company’s revenues. In fiscal second quarter, foreign currency headwinds had a 1.5% impact on the company’s revenue growth. PepsiCo expects currency headwinds to adversely impact revenues by approximately 2%. The company expects the 53rd week in fiscal 2016 to negatively impact reported net revenues in fiscal 2017 by 1%.
Coming to the company’s margins, PepsiCo had indicated that as the commodity inflation is expected to continue in 2017, the company’s gross margin might face some pressure in the to-be-reported quarter.
Notwithstanding the above-mentioned concerns, the company beat expectation in the last six quarters. PepsiCo delivered revenue growth in the last three quarters after successive declines in revenues in the previous nine quarters. We expect this trend to continue in the to-be-reported quarter as well.
For the fiscal third quarter, the Zacks Consensus Estimate for earnings stands at $1.42, reflecting a 1.5% year-over-year increase. Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $16.42 billion, implying a 2.4% growth.
Stocks to Consider
Here are some consumer staples stocks that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter.
The Coca-Cola Company (KO - Free Report) has an Earnings ESP of +0.68% and a Zacks Rank #3. The company is scheduled to report quarterly numbers on Oct 25.
The Procter & Gamble Company (PG - Free Report) has an Earnings ESP of +0.44% and a Zacks Rank #2. The company is expected to report earnings results on Oct 24.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
PepsiCo (PEP) Gears Up for Q3 Earnings: Is a Beat in Store?
We expect food/beverage giant PepsiCo, Inc. (PEP - Free Report) to beat expectations when it reports third-quarter fiscal 2017 results on Oct 4, before market open. Last quarter, the company delivered a positive earnings surprise of 7.91%. The company also surpassed expectations in each of the trailing four quarters, the average beat being 5.18%. Let’s see how things are shaping up prior to this announcement.
Pepsico, Inc. Price and EPS Surprise
Pepsico, Inc. Price and EPS Surprise | Pepsico, Inc. Quote
Why a Likely Positive Surprise?
Our proven model shows that PepsiCo is likely to beat earnings because it has the right combination of two key components.
Zacks ESP: PepsiCo has an Earnings ESP of +0.27%. The Most Accurate Estimate for the current quarter is currently at $1.43 per share for PEP compared to a broader Zacks Consensus Estimate of $1.42 per share. A favorable Zacks ESP serves as a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PepsiCo currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates. Conversely, stocks with a Zacks Rank #4 or 5 (Sell rated) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
The combination of PepsiCo’s favorable Zacks Rank and a positive ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-Than-Expected Earnings?
PepsiCo has delivered revenue growth in the past three quarters banking on significant innovation, continued momentum in Frito-Lay business, revenue management strategies, along with better market execution. Moreover, it has been witnessing higher volumes and profits in the North American segments due to an improving economy, better industry pricing dynamics and a consistency in positive innovation.
Health awareness has been prime concern for consumers in recent times and capitalizing on this trend can prove to be beneficial for any beverage company in 2017. Keeping this in mind, PepsiCo is gradually reshuffling its portfolio toward healthier Everyday Nutrition Products and the company believes that such products will play an important role in the long-term growth.
That said, consumer tastes are rapidly shifting from carbonated soft drinks (CSDs) to non-carbonated beverages. Hence, sluggish CSD volumes are pressing concerns for this beverage giant as well as for other nonalcoholic beverage companies.
Again, adverse currency movements continued to negatively impact the company’s revenues. In fiscal second quarter, foreign currency headwinds had a 1.5% impact on the company’s revenue growth. PepsiCo expects currency headwinds to adversely impact revenues by approximately 2%. The company expects the 53rd week in fiscal 2016 to negatively impact reported net revenues in fiscal 2017 by 1%.
Coming to the company’s margins, PepsiCo had indicated that as the commodity inflation is expected to continue in 2017, the company’s gross margin might face some pressure in the to-be-reported quarter.
Notwithstanding the above-mentioned concerns, the company beat expectation in the last six quarters. PepsiCo delivered revenue growth in the last three quarters after successive declines in revenues in the previous nine quarters. We expect this trend to continue in the to-be-reported quarter as well.
For the fiscal third quarter, the Zacks Consensus Estimate for earnings stands at $1.42, reflecting a 1.5% year-over-year increase. Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $16.42 billion, implying a 2.4% growth.
Stocks to Consider
Here are some consumer staples stocks that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter.
The Coca-Cola Company (KO - Free Report) has an Earnings ESP of +0.68% and a Zacks Rank #3. The company is scheduled to report quarterly numbers on Oct 25.
The Procter & Gamble Company (PG - Free Report) has an Earnings ESP of +0.44% and a Zacks Rank #2. The company is expected to report earnings results on Oct 24.
Philip Morris International Inc. (PM - Free Report) has an Earnings ESP of +1.50% and a Zacks Rank #3. The company is scheduled to report quarterly numbers on Oct 19. You can see the complete list of today’s Zacks #1 Rank stocks here.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>