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

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In the latest trading session, PepsiCo (PEP - Free Report) closed at $144.33, marking a +0.02% move from the previous day. This change lagged the S&P 500's 0.33% gain on the day. Elsewhere, the Dow gained 0.3%, while the tech-heavy Nasdaq added 0.67%.

Coming into today, shares of the food and beverage company had gained 7.13% in the past month. In that same time, the Consumer Staples sector gained 1%, while the S&P 500 gained 3.24%.

Investors will be hoping for strength from PEP as it approaches its next earnings release, which is expected to be February 13, 2020. The company is expected to report EPS of $1.43, down 4.03% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $20.38 billion, up 4.4% from the year-ago period.

Investors might also notice recent changes to analyst estimates for PEP. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.07% lower. PEP is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note PEP's current valuation metrics, including its Forward P/E ratio of 24.31. For comparison, its industry has an average Forward P/E of 21.48, which means PEP is trading at a premium to the group.

It is also worth noting that PEP currently has a PEG ratio of 3.48. 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. PEP's industry had an average PEG ratio of 2.14 as of yesterday's close.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 92, putting it in the top 37% 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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