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Coke, PepsiCo Earnings Should Help Staples ETFs

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The Zacks Rank #3 (Hold) soft drink bellwether Coca-Cola Company (KO - Free Report)  reported earnings on Feb 10 before market open and Zacks Rank #3 PepsiCo Inc. (PEP - Free Report)  reported results on Feb 11.  While PepsiCo beat overall, Coke came up with mixed results. Let’s delve a little deeper.

Coca-Cola Earnings in Details

Coca-Cola delivered fourth-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate and rose year over year.  However, the top line lagged estimates and declined on a year-over-year basis. The company witnessed sequential improvement in volume trends.

Comparable earnings of 47 cents per share beat the Zacks Consensus Estimate of 41 cents and improved 6% from the year-ago period. Currency translations negatively impacted earnings by 9%. Comparable currency-neutral earnings per share rose 14%.

Revenues of $8,611 million missed the Zacks Consensus Estimate of $8,699.3 million and declined 5% year over year. Organic revenues were down 3% from the prior-year quarter. The company’s top line reflected improved trends from prior quarters. Also, two additional days in the quarter aided revenue growth.

PepsiCo Earnings in Detail

PepsiCo had a strong finish to 2020, with fourth-quarter earnings and sales surpassing estimates and improving year over year. Despite continued challenges related to the coronavirus pandemic, the company’s robust fourth-quarter performance was backed by resilience and strength in its global snacks and foods business as well as accelerated growth in the beverage category.

PepsiCo also gained from its strong portfolio of brands, a responsive supply chain and flexible go-to-market systems, which helped maintain continued supplies amid the coronavirus pandemic.

PepsiCo’s fourth-quarter core earnings per share of $1.47 beat the Zacks Consensus Estimate of $1.45 and increased 1.4% year over year. In constant currency, core earnings were up 3% from the year-ago period. The company’s reported EPS of $1.33 improved 5% year over year.

Net revenues of $22,455 million improved 8.8% year over year and surpassed the Zacks Consensus Estimate of $21,996.3 million. On an organic basis, revenues grew 5.7% year over year. Foreign currency impacted revenues and earnings by 2% each in the fourth quarter. Revenues benefited from the continued momentum in the snacking category as well as gains in the beverage business.

Against this mixed backdrop, investors may be interested in knowing about the Coke and PepsiCo-heavy ETFs along with their stocks. This is because an ETF approach always minimizes company-specific risks.

ETFs in Focus

Coca-Cola and PepsiCo each has exposure to funds like iShares Evolved U.S. Consumer Staples ETF Consumer Staples Select Sector SPDR Fund (XLP - Free Report) , Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)  and Vanguard Consumer Staples ETF (VDC - Free Report) in the range of 8% to 11%.

In the past three-month period, shares of these two stocks slumped in the range of 6% to 7.5% as risk-on rally aided the discretionary stocks. However, consumer staples ETFs lost much less than the aforementioned stocks, hence making the ETF approach a good way to deal with a mixed earnings scenario.

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