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

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PepsiCo (PEP - Free Report) closed the most recent trading day at $137.10, moving +1.14% from the previous trading session. This move lagged the S&P 500's daily gain of 2.02%. At the same time, the Dow added 1.6%, and the tech-heavy Nasdaq gained 2.71%.

Coming into today, shares of the food and beverage company had gained 0.32% in the past month. In that same time, the Consumer Staples sector gained 0.82%, while the S&P 500 lost 0.39%.

Investors will be hoping for strength from PEP as it approaches its next earnings release, which is expected to be October 1, 2020. The company is expected to report EPS of $1.47, down 5.77% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $17.26 billion, up 0.41% from the year-ago period.

PEP's full-year Zacks Consensus Estimates are calling for earnings of $5.34 per share and revenue of $68.31 billion. These results would represent year-over-year changes of -3.44% and +1.72%, respectively.

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. 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. Within the past 30 days, our consensus EPS projection remained stagnant. PEP is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note PEP's current valuation metrics, including its Forward P/E ratio of 25.37. Its industry sports an average Forward P/E of 23.15, so we one might conclude that PEP is trading at a premium comparatively.

Meanwhile, PEP's PEG ratio is currently 4.53. 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 4.53 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 187, which puts it in the bottom 27% 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.

To follow PEP in the coming trading sessions, be sure to utilize Zacks.com.


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