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The Zacks Analyst Blog Highlights Coca-Cola, PepsiCo, XLP, FSTA and VDC

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For Immediate Release

Chicago, IL – February 23, 2023 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Coca-Cola Co. (KO - Free Report) , PepsiCo Inc. (PEP - Free Report) , 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)

Here are highlights from Wednesday’s Analyst Blog:

Coke, Pepsi Earnings Should Boost Consumer Discretionary ETFs

The Zacks Rank #2 (Buy) soft drink bellwether Coca-Cola Co. reported earnings on Feb 13 and Zacks Rank #3 (Hold) PepsiCo Inc. reported on Feb 8.  Both giants came up with upbeat earnings, auguring well for the consumer staples sector. Let's delve a little deeper.

Coca-Cola: Mixed Earnings; Upbeat View

The Coca-Cola Company reported better-than-expected top-line results for fourth-quarter 2022, while the bottom line was in line with the Zacks Consensus Estimate. Earnings and sales improved year over year and surpassed our estimates in the quarter.

Comparable earnings of 45 cents per share were in line with the Zacks Consensus Estimate and the year-ago period. Meanwhile, comparable earnings surpassed our estimate of 44 cents. Revenues of $10,125 million surpassed the Zacks Consensus Estimate of $10,005 million and improved 7% year over year. Revenues also beat our estimate of $9,603.7 million.

Organic revenues rose 15% from the prior-year quarter thanks to higher prices. The beverage company said its unit case volume, which strips out the impact of currency and price changes, fell 1%. In the reported quarter, Coca-Cola gained a global value share in total non-alcoholic ready-to-drink beverages.

Coca-Cola's U.S. business is still performing well despite high inflation and the reopening of China will likely favor sales this year. For 2023, Coke projects comparable revenue growth of 3% to 5% and comparable earnings per share growth of 4% to 5%. Wall Street was forecasting revenue growth of 3.9% and earnings per share growth of 3% for the year, as quoted on CNBC.

PepsiCo: Solid Earnings; Strong View

PepsiCo reported robust fourth-quarter 2022 results, wherein revenues and earnings surpassed the Zacks Consensus Estimate and our estimate. The top and bottom lines also improved year over year. The company provided a positive view for 2023.

PepsiCo's fourth-quarter core EPS of $1.67 beat the Zacks Consensus Estimate of $1.64 and our estimate of $1.61. Core EPS also increased 9.2% year over year. Net revenues of $27,996 million improved 10.9% year over year and surpassed the Zacks Consensus Estimate of $26,849 million and our estimate of $26,347.5 million.

On an organic basis, revenues grew 15% year over year. In constant currency, core earnings were up 10% from the year-ago period. This marked the fifth straight quarter of double-digit organic revenue growth for the company.

For 2023, Pepsi is projecting a 6% increase in organic revenue and 8% growth in its core constant currency earnings per share. Wall Street is anticipating net sales growth of 3.5% and earnings per share growth of 7.3%.

Against this backdrop, investors may be interested in knowing about the Coke and PepsiCo-heavy ETFs along with their stocks. This is because an ETF approach offers one to bet on both stocks.

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, Fidelity MSCI Consumer Staples Index ETF and Vanguard Consumer Staples ETF in the range of 8% to 11%.

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