Pepsico (PEP) earnings preview: will profit growth accelerate?

5:11 pm ET, 06 Jul 2018

Pepsico, Inc. (PEP) is expected to report earnings on July 10 before market open. The report will be for the fiscal quarter ending June 2018. Pepsico, Inc. (PEP) shares are trading at 108.68, up 0.38%.

What are the PEP earnings expectations?  What news will the market be watching out for?

Pepsi controls a greater share of the US noncarbonated beverage market (more than 40%) than Coca-Cola (33%) and Dr Pepper (4%), which should enable it to offset the persistent decline of carbonated soft drinks.  The company has an unparalleled portfolio of salty snacks, including a roughly 60% share for potato chips, further entrenching its relationships with retailers. 

However, an increasing proportion of sales from emerging markets such as China tend to have lower margins--and that could affect Pepsi’s profitability.  Consumer tastes and preferences vary around the world, and Pepsi could be at a disadvantage to grow its share position outside the US, given Coca-Cola's massive advantage in the carbonated soft drink segment over Pepsi in several international markets.

Pepsico, Inc. has the history of beating analysts’ earnings estimates.  In the past four quarters, the company: 

  • Beat analyst EPS estimates by 10 cents ($1.50 actuals vs. $1.40 forecast) in FQ2’17;
  • Beat analyst EPS estimates by 6 cents ($1.48 actuals vs. $1.42 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 1 cent ($1.31 actuals vs. $1.30 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 4 cents ($.96 actuals vs. $.92 forecast) in FQ1’18;

For FQ2’18, EPS is expected to grow by 1% year-over-year to $1.52, while revenue is expected to grow 3% year-over-year to $16.15 billion.  


Pepsico, Inc. (PEP) average analyst price target ($116.00) is 6.74% above its current price ($108.68).

For the latest price and information on Pepsico, Inc., please visit Finstead and search for "PEP price" or "PEP news".

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

Pepsico, Inc. (PEP) Stock Guide

Updated at: 8:14 am ET, 22 Jul 2020

Before we start: if you're looking for PEP stock price, you can quickly find it out by visiting Finny and typing "PEP quote". If you're looking for a quick scoop on PEP stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "PEP". You'll get all this info in one place. Or you can just type "PEP news" to get the latest stock news.

Looking to buy or sell Pepsico, Inc. (PEP)? Interested in getting the full scoop on PEP, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this PEP stock guide, we'll address key questions about PEP, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are PEP earnings?
2. When is PEP earnings date?
3. What is PEP dividend?
4. What is PEP dividend yield?
5. What is PEP stock forecast (i.e., prediction)?
6. PEP buy or sell? What is PEP Finny Score?
7. What are the reasons to buy PEP? Why should I buy PEP stock?
8. What are the reasons to sell PEP? Why should I sell PEP stock?
9. What are PEP key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are PEP earnings?

PEP trailing 12-month earnings per share (EPS) is $5.16.

2. When is PEP earnings date?

PEP earnings date is October 01, 2020.

3. What is PEP dividend?

PEP forward dividend is $4.09.

4. What is PEP dividend yield?

PEP forward dividend yield is 3.08%.

Analyst Predictions

5. What is PEP stock forecast (i.e., prediction)?

Based on PEP analyst price targets, PEP stock forecast is $142.65 (for a year from now). That means the average analyst price target for PEP stock is $142.65. The prediction is based on 22 analyst estimates.

The low price target for PEP is $124.00, while the high price target is $156.00.

PEP analyst rating is Buy.

Analysis

6. PEP buy or sell? What is PEP Finny Score?

#{finnyScore:56}Our quantitative analysis shows 5 reasons to buy and 4 reasons to sell PEP, resulting in Finny Score of 56.

7. What are the reasons to buy PEP? Why should I buy PEP stock?

Here are the reasons to buy PEP stock:

  • Pepsi controls a greater share of the U.S. noncarbonated beverage market (above 40%) than peers Coca-Cola (33%) and Dr Pepper (4%), which should enable it to offset the persistent decline of carbonated soft drinks.
  • Pepsi has an unparalleled portfolio of salty snacks, including over a 60% share for potato chips, further entrenching its relationships with retailers.
  • Joint ventures with Starbucks and Unilever (Lipton brand) expose Pepsi to the rapidly-growing ready-to-drink coffee and tea markets.
  • Pepsi's portfolio consists of $22 Billion brands such as Quaker, Tropicana, and Gatorade that are sold in 200 countries.
  • Newly launched products are generating an increasing share of revenue. The Company added non-carbonated drinks such as LIFEWTR and entered the dairy sector through JVs to expand its portfolio. Single-serve and alternative multi-serve packages are used for better margin and profits.
  • A 5-year restructuring plan was put in place to save $1 Billion annually from 2015-19 through various productivity initiatives.
  • Pepsi yielded a 10% compound growth rate of annual dividends per share (a $65 Billion cash return) over the last 10 years. It has continuously increased dividends for 45 years, with a 7% hike in 2016 and 2017.
  • PEP quarterly revenue growth was 7.70%, higher than the industry and sector average revenue growth (1.09% and 1.32%, respectively). See PEP revenue growth chart.
  • PEP forward dividend yield is 3.08%, higher than the industry (0.44%) and sector (0.62%) forward dividend yields. See PEP forward dividend chart.
  • PEP average analyst rating is Buy. See PEP analyst rating chart.
  • PEP cash to debt ratio is 0.27, higher than the average industry (0.07) and sector (0.11) cash to debt ratio. See PEP cash to debt chart.
  • PEP Enterprise Value/Revenue multiple is 3.17, which is low compared to its industry peers’ Enterprise Value/Revenue multiples. See PEP Enterprise Value/Revenue chart.

8. What are the reasons to sell PEP? Why should I sell PEP stock?

Let's look at the reasons to sell PEP stock (i.e., the bear case):

  • An increasing proportion of sales from emerging markets, like China, that tend to have lower margins could weigh on Pepsi’s profitability.
  • Taxes on sugary beverages could prompt individuals to seek out other beverage alternatives, hindering volumes, particularly in higher-margin developed markets.
  • Consumer tastes and preferences vary around the world, and Pepsi could be at a disadvantage to grow its share position outside the U.S., given Coca-Cola has amassed a significant carbonated soft drink share advantage over Pepsi in several international markets.
  • The shift of consumer tastes to non-carbonated beverages has reduced the carbonated soft drink volume by 1-2% in the recent years.
  • PEP profitability is declining. The YoY profit margin change was -2.43 percentage points. See PEP profitability chart.
  • PEP forward P/E ratio is 22.59, which is high compared to its industry peers’ P/E ratios. See PEP forward P/E ratio chart.
  • PEP Price/Book ratio is 13.73, which is high compared to its industry peers’ P/B ratios. See PEP forward Price/Book ratio chart.
  • PEP short interest (days to cover the shorts) ratio is 1.87. The stock garners more short interest than the average industry, sector or S&P 500 stock. See PEP short interest ratio chart.

Key Stats

9. What are PEP key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for PEP:

Metrics PEP
Price $136.49
Average Price Target / Upside $142.65 / 4.51%
Average Analyst Rating Buy
Forward Dividend Yield 3.08%
Industry Beverages - Soft Drinks
Sector Consumer Defensive
Number of Employees 267,000
Market Cap $185.57B
Forward P/E Ratio 22.59
Price/Book Ratio 2.72
Revenue (TTM) $68.16B
YoY Quarterly Revenue Growth 7.70%
Profit Margin 10.62%

If you liked this analysis, check out Stock Guides for other stocks.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

Use Finny to ask any finance or investment question. Big or small. Personal or general.
Follow Us