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PepsiCo (PEP) Sees Brand Strength: Will Its Q4 Earnings Beat?
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PepsiCo, Inc. (PEP - Free Report) is expected to register bottom and top-line growth when it reports fourth-quarter 2023 numbers on Feb 9, before the opening bell. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $28.2 billion, implying 0.9% growth from the year-ago quarter's reported figure.
For quarterly earnings, the Zacks Consensus Estimate is pegged at $1.72, suggesting 3% growth from the $1.67 reported in the prior-year quarter. The consensus mark has been unchanged in the past 30 days.
In the last reported quarter, the company registered an earnings beat of 3.7%. It has delivered an earnings surprise of 5.6%, on average, in the trailing four quarters.
PepsiCo has been benefiting from strength and resilience in its diversified portfolio, modernized supply chain, improved digital capabilities, flexible go-to market distribution systems, and robust consumer demand trends. The company is likely to have gained from delivering convenience, variety and value proposition to customers through its brands in the to-be-reported quarter.
PEP’s fourth-quarter results are expected to reflect gains from improved pricing across all segments. The bottom line is likely to reflect the continued benefits of the mitigation of inflationary pressures through cost-management and revenue-management initiatives. PepsiCo is likely to have benefited from the resilience and strength of the global beverage and convenient food businesses.
We expect year-over-year consolidated organic revenue growth of 6.2% for the fourth quarter, driven by a 9.6% rise in the price/mix, offset by a 3.5% decline in volume.
Market share growth in the liquid refreshment beverage category, with share gains in the carbonated soft drinks, ready-to-drink tea and water categories, is likely to have aided the improvement in the beverage category. Investments in innovation and execution also bode well.
The company’s food business has been gaining from revenue growth across core brands like Doritos, Lay’s, Ruffles, Tostitos and Cheetos. The Quaker business has been benefiting from market share gains in the rice and pasta, lite snacks, ready-to-eat cereal, and snack bar categories, as it has been capitalizing on the elevated demand for tasty products that deliver convenience and value.
However, PepsiCo’s fourth-quarter gross margin is expected to have been partly negated by inflationary labor, transportation and commodity costs. Adverse currency rates are also likely to have been headwinds.
Increased advertising and marketing expenses, along with additional investments to build digital capabilities and integrate purpose throughout the company, are likely to have led to a rise in SG&A expenses in the to-be-reported quarter.
We anticipate the adjusted gross margin to expand 30 bps to 52.8% in the fourth quarter. Margin growth can be attributed to the easing of supply-chain headwinds, partly offset by inflationary costs. Meanwhile, our estimate for adjusted SG&A expenses of $11.9 billion indicates a year-over-year rise of 1.1%. Driven by the gross margin expansion and higher SG&A expenses, our model suggests a 10-bps operating margin expansion to 10.6% in the fourth quarter.
Zacks Model
Our proven model does not conclusively predict 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 chances of an earnings beat. But that’s not the case here. 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 -0.41%.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Coca-Cola (KO - Free Report) currently has an Earnings ESP of +0.70% and a Zacks Rank #2. The company is expected to register top and bottom-line growth when it reports fourth-quarter 2023 numbers. The Zacks Consensus Estimate for KO’s quarterly revenues is pegged at $10.6 billion, which suggests growth of 5% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Coca-Cola’s quarterly earnings has been unchanged in the past 30 days at 48 cents per share. The estimate suggests 6.7% growth from the year-ago reported quarter. KO has delivered an earnings surprise of 5.1%, on average, in the trailing four quarters.
Dutch Bros (BROS - Free Report) currently has an Earnings ESP of +9.38% and a Zacks Rank #3. BROS is anticipated to register top-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for Dutch Bros’ quarterly revenues is pegged at $254.8 million, indicating growth of 26.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Dutch Bros’ earnings has moved down by a penny in the past 30 days to 2 cents per share. The consensus estimate suggests a 33.3% decline from the prior-year quarter’s reported figure. BROS has delivered an earnings beat of 57.1%, on average, in the trailing four quarters.
Monster Beverage (MNST - Free Report) has an Earnings ESP of +1.65% and a Zacks Rank #3 at present. MNST is likely to register top and bottom-line growth when it releases fourth-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.8 billion, which suggests growth of 15.9% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Monster Beverage’s quarterly earnings has been unchanged in the past 30 days at 39 cents per share, suggesting growth of 34.5% from the year-ago quarter’s reported number. MNST has delivered an earnings surprise of 1.9%, on average, in the trailing four quarters.
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PepsiCo (PEP) Sees Brand Strength: Will Its Q4 Earnings Beat?
PepsiCo, Inc. (PEP - Free Report) is expected to register bottom and top-line growth when it reports fourth-quarter 2023 numbers on Feb 9, before the opening bell. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $28.2 billion, implying 0.9% growth from the year-ago quarter's reported figure.
For quarterly earnings, the Zacks Consensus Estimate is pegged at $1.72, suggesting 3% growth from the $1.67 reported in the prior-year quarter. The consensus mark has been unchanged in the past 30 days.
In the last reported quarter, the company registered an earnings beat of 3.7%. It has delivered an earnings surprise of 5.6%, 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 benefiting from strength and resilience in its diversified portfolio, modernized supply chain, improved digital capabilities, flexible go-to market distribution systems, and robust consumer demand trends. The company is likely to have gained from delivering convenience, variety and value proposition to customers through its brands in the to-be-reported quarter.
PEP’s fourth-quarter results are expected to reflect gains from improved pricing across all segments. The bottom line is likely to reflect the continued benefits of the mitigation of inflationary pressures through cost-management and revenue-management initiatives. PepsiCo is likely to have benefited from the resilience and strength of the global beverage and convenient food businesses.
We expect year-over-year consolidated organic revenue growth of 6.2% for the fourth quarter, driven by a 9.6% rise in the price/mix, offset by a 3.5% decline in volume.
Market share growth in the liquid refreshment beverage category, with share gains in the carbonated soft drinks, ready-to-drink tea and water categories, is likely to have aided the improvement in the beverage category. Investments in innovation and execution also bode well.
The company’s food business has been gaining from revenue growth across core brands like Doritos, Lay’s, Ruffles, Tostitos and Cheetos. The Quaker business has been benefiting from market share gains in the rice and pasta, lite snacks, ready-to-eat cereal, and snack bar categories, as it has been capitalizing on the elevated demand for tasty products that deliver convenience and value.
However, PepsiCo’s fourth-quarter gross margin is expected to have been partly negated by inflationary labor, transportation and commodity costs. Adverse currency rates are also likely to have been headwinds.
Increased advertising and marketing expenses, along with additional investments to build digital capabilities and integrate purpose throughout the company, are likely to have led to a rise in SG&A expenses in the to-be-reported quarter.
We anticipate the adjusted gross margin to expand 30 bps to 52.8% in the fourth quarter. Margin growth can be attributed to the easing of supply-chain headwinds, partly offset by inflationary costs. Meanwhile, our estimate for adjusted SG&A expenses of $11.9 billion indicates a year-over-year rise of 1.1%. Driven by the gross margin expansion and higher SG&A expenses, our model suggests a 10-bps operating margin expansion to 10.6% in the fourth quarter.
Zacks Model
Our proven model does not conclusively predict 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 chances of an earnings beat. But that’s not the case here. 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 -0.41%.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Coca-Cola (KO - Free Report) currently has an Earnings ESP of +0.70% and a Zacks Rank #2. The company is expected to register top and bottom-line growth when it reports fourth-quarter 2023 numbers. The Zacks Consensus Estimate for KO’s quarterly revenues is pegged at $10.6 billion, which suggests growth of 5% from the prior-year quarter’s reported figure.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coca-Cola’s quarterly earnings has been unchanged in the past 30 days at 48 cents per share. The estimate suggests 6.7% growth from the year-ago reported quarter. KO has delivered an earnings surprise of 5.1%, on average, in the trailing four quarters.
Dutch Bros (BROS - Free Report) currently has an Earnings ESP of +9.38% and a Zacks Rank #3. BROS is anticipated to register top-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for Dutch Bros’ quarterly revenues is pegged at $254.8 million, indicating growth of 26.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Dutch Bros’ earnings has moved down by a penny in the past 30 days to 2 cents per share. The consensus estimate suggests a 33.3% decline from the prior-year quarter’s reported figure. BROS has delivered an earnings beat of 57.1%, on average, in the trailing four quarters.
Monster Beverage (MNST - Free Report) has an Earnings ESP of +1.65% and a Zacks Rank #3 at present. MNST is likely to register top and bottom-line growth when it releases fourth-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.8 billion, which suggests growth of 15.9% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Monster Beverage’s quarterly earnings has been unchanged in the past 30 days at 39 cents per share, suggesting growth of 34.5% from the year-ago quarter’s reported number. MNST has delivered an earnings surprise of 1.9%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.