PepsiCo’s Market Struggles Amid Earnings Surprises
Stock Performance Falls Behind Industry Benchmarks
With a market cap of $225.4 billion, PepsiCo, Inc. (PEP) operates in the food and beverage sector, manufacturing and distributing snacks, beverages, and other consumables on a global scale. The Purchase, New York-based company reaches consumers worldwide through various distribution channels, including direct delivery, warehouses, and e-commerce.
Challenges in the Stock Market
Over the past 52 weeks, PepsiCo shares have lagged behind the broader market. PEP has declined 1.4%, while the S&P 500 Index ($SPX) has rallied 35.9%. In 2024, PEP shares are down 3.1%, contrasting with SPX’s 25.8% year-to-date gain.
Examining more closely, PepsiCo’s performance has also fallen short compared to the Consumer Staples Select Sector SPDR Fund’s (XLP) 16.9% gain over the last year and an 11.9% year-to-date return.
Positive Earnings Results Lifts Stock Slightly
PepsiCo’s shares rose 1.9% on October 8, following a Q3 earnings beat. The core EPS of $2.31 exceeded analyst expectations and showed a year-over-year increase of 2.7%. Although revenue fell short at $23.3 billion, the company reported notable international growth, with organic revenue up 4% and significant volume increases. Investors were also encouraged as PepsiCo reaffirmed its forecast of at least 8% core EPS growth for 2024.
For the current fiscal year, which ends in December, analysts predict PEP’s EPS to grow around 7% year-over-year to $8.15. The company’s recent history of earnings surprises is noteworthy, having exceeded consensus estimates in the last four quarters.
Analyst Ratings and Future Projections
Among the 19 analysts covering PEP, the consensus rating is a “Moderate Buy.” This is based on eight “Strong Buy” ratings, 10 “Holds,” and one “Strong Sell.” However, this outlook is less optimistic than it was three months ago when there were 10 “Strong Buy” ratings.
On October 10, Deutsche Bank reduced PepsiCo’s price target to $179 and maintained a “Hold” rating due to concerns about weakened sales momentum, despite steady earnings projections for 2024. They noted a potential upside if U.S. demand improves with the company’s efforts.
As of this writing, PEP’s trading price is below the mean target of $183.28. The highest price target of $200 suggests a potential upside of 22.1% from the current trading price.
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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
