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Things to Note Ahead of PepsiCo's (PEP) Q3 Earnings Results
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PepsiCo, Inc. (PEP - Free Report) is expected to register top and bottom-line growth when it reports third-quarter 2021 numbers on Oct 5, before the opening bell. The Zacks Consensus Estimate for third-quarter revenues is pegged at $19.44 billion, implying 7.5% growth from the year-ago quarter's reported figure.
For quarterly earnings, the Zacks Consensus Estimate is pegged at $1.73, suggesting growth of 4.2% from the prior-year quarter’s reported figure. The consensus mark has moved up by a penny in the past seven days.
In the last reported quarter, the company’s bottom line beat the Zacks Consensus Estimate by 13.2%. It delivered an earnings surprise of 8.7%, on average, in the trailing four quarters.
PepsiCo has been resilient amid the pandemic, owing to the strong demand for its snacking business as consumers stayed at home. This helped offset the softness in the beverage category, which suffered due to the closure of on-premise businesses — including restaurants, bars and cinemas. Given the increased vaccination drive, consumers are now venturing out, which has marked the return of on-premise sales growth for PepsiCo’s beverage business.
The company is also expected to have benefited from the transforming trends in the beverage business due to increased health-consciousness, personal well-being, natural ingredients, varied flavors and better experience, which are changing consumers’ consumption patterns. Consciousness for an active lifestyle and healthy eating habits have given prominence to natural, plant-based, and organic ingredients in food and beverages.
The continued resilience and strength in the global snacks and foods business along with accelerated growth in the beverage category is expected to have aided PepsiCo’s third-quarter 2021 performance.
The company has been benefiting from brand investments, go-to-market systems, supply chain, manufacturing capacity and digital capabilities to build competitive advantages. Robust pricing and volume gains have also been aiding its performance.
However, the industry dynamics have considerably changed since the company’s second-quarter 2021 results. World economies have been dealing with the rise in coronavirus cases due to the delta variant and the resulting closures. Supply chain constraints have cropped up in recent months, which have caused product shortages and led to higher freight costs. Like others in the industry, PepsiCo’s third-quarter results are likely to reflect the impacts of the aforementioned factors.
On its last reported quarter’s earnings call, management indicated that it expects to deal with the inflationary cost pressures by altering its pricing strategy. Consequently, the company’s third-quarter sales will likely reflect the effects of higher prices in response to the rising costs. The higher freight and other costs are likely to get reflected in the company’s margins.
Zacks Model
Our proven model conclusively predicts an earnings beat for PepsiCo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
PepsiCo has a Zacks Rank #3 and an Earnings ESP of +0.23%.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat:
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Things to Note Ahead of PepsiCo's (PEP) Q3 Earnings Results
PepsiCo, Inc. (PEP - Free Report) is expected to register top and bottom-line growth when it reports third-quarter 2021 numbers on Oct 5, before the opening bell. The Zacks Consensus Estimate for third-quarter revenues is pegged at $19.44 billion, implying 7.5% growth from the year-ago quarter's reported figure.
For quarterly earnings, the Zacks Consensus Estimate is pegged at $1.73, suggesting growth of 4.2% from the prior-year quarter’s reported figure. The consensus mark has moved up by a penny in the past seven days.
In the last reported quarter, the company’s bottom line beat the Zacks Consensus Estimate by 13.2%. It delivered an earnings surprise of 8.7%, on average, in the trailing four quarters.
PepsiCo, Inc. Price and EPS Surprise
PepsiCo, Inc. price-eps-surprise | PepsiCo, Inc. Quote
Key Factors to Note
PepsiCo has been resilient amid the pandemic, owing to the strong demand for its snacking business as consumers stayed at home. This helped offset the softness in the beverage category, which suffered due to the closure of on-premise businesses — including restaurants, bars and cinemas. Given the increased vaccination drive, consumers are now venturing out, which has marked the return of on-premise sales growth for PepsiCo’s beverage business.
The company is also expected to have benefited from the transforming trends in the beverage business due to increased health-consciousness, personal well-being, natural ingredients, varied flavors and better experience, which are changing consumers’ consumption patterns. Consciousness for an active lifestyle and healthy eating habits have given prominence to natural, plant-based, and organic ingredients in food and beverages.
The continued resilience and strength in the global snacks and foods business along with accelerated growth in the beverage category is expected to have aided PepsiCo’s third-quarter 2021 performance.
The company has been benefiting from brand investments, go-to-market systems, supply chain, manufacturing capacity and digital capabilities to build competitive advantages. Robust pricing and volume gains have also been aiding its performance.
However, the industry dynamics have considerably changed since the company’s second-quarter 2021 results. World economies have been dealing with the rise in coronavirus cases due to the delta variant and the resulting closures. Supply chain constraints have cropped up in recent months, which have caused product shortages and led to higher freight costs. Like others in the industry, PepsiCo’s third-quarter results are likely to reflect the impacts of the aforementioned factors.
On its last reported quarter’s earnings call, management indicated that it expects to deal with the inflationary cost pressures by altering its pricing strategy. Consequently, the company’s third-quarter sales will likely reflect the effects of higher prices in response to the rising costs. The higher freight and other costs are likely to get reflected in the company’s margins.
Zacks Model
Our proven model conclusively predicts an earnings beat for PepsiCo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
PepsiCo has a Zacks Rank #3 and an Earnings ESP of +0.23%.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat:
The Coca-Cola Company (KO - Free Report) presently has an Earnings ESP of +0.99% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kellogg Company (K - Free Report) has an Earnings ESP of +2.51% and a Zacks Rank #3 at present.
The Procter & Gamble Company (PG - Free Report) currently has an Earnings ESP of +2.42% and a Zacks Rank #3.