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

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PepsiCo (PEP - Free Report) closed at $129.07 in the latest trading session, marking a +0.84% move from the prior day. The stock lagged the S&P 500's daily gain of 2.14%. Elsewhere, the Dow gained 2.06%, while the tech-heavy Nasdaq added 2.65%.

Coming into today, shares of the food and beverage company had gained 1.34% in the past month. In that same time, the Consumer Staples sector lost 2.74%, while the S&P 500 lost 6.63%.

Investors will be hoping for strength from PEP as it approaches its next earnings release, which is expected to be July 9, 2019. The company is expected to report EPS of $1.50, down 6.83% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $16.42 billion, up 2.08% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.51 per share and revenue of $66.52 billion, which would represent changes of -2.65% and +2.88%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for PEP. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.05% higher. PEP is currently a Zacks Rank #2 (Buy).

Looking at its valuation, PEP is holding a Forward P/E ratio of 23.4. Its industry sports an average Forward P/E of 23.23, so we one might conclude that PEP is trading at a premium comparatively.

Also, we should mention that PEP has a PEG ratio of 3.35. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Beverages - Soft drinks was holding an average PEG ratio of 2.19 at yesterday's closing price.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 168, putting it in the bottom 35% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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