Headquartered in New York, PepsiCo, Inc. (PEP) boasts a global presence with its wide-ranging portfolio of beverages and convenient foods. With a substantial market cap of $233.7 billion, the company is set to release its fiscal Q3 earnings before the market opens on Tuesday, Oct. 8.
Ahead of the event, analysts expect PepsiCo to report a profit of $2.31 per share, a 2.7% jump from $2.25 per share in the year-ago quarter. The company has consistently surpassed Wall Street’s bottom-line estimates in each of the last four quarters.
Despite subdued category performance within the North American unit, its core earnings of $2.28 per share for the last reported quarter surged 9.1% year over year, beating the consensus estimate by 6.1%, thanks to its thriving international business.
For fiscal 2024, analysts expect PepsiCo to report an EPS of $8.14, up 6.8% from $7.62 in fiscal 2023. Fiscal 2025 EPS is expected to grow 7.4% annually to $8.74.
PEP stock surged marginally on a YTD basis, significantly underperforming the broader S&P 500 Index's ($SPX) 20.3% gain and the S&P 500 Cons Staples Sector SPDR’s (XLP) 15.3% return over the same time frame.
PepsiCo's underwhelming price performance this year stems from intense competition, shifting consumer preferences toward healthier products, rising costs, and weakened consumer spending in key markets. These factors have pressured its traditional snack and beverage lines despite the company's efforts to adapt and invest in healthier alternatives.
On Sept. 20, PEP stock fell 2%, following a downgrade from Morgan Stanley (MS) analyst Dara Mohsenian, who shifted the rating from "Buy" to "Hold." Despite maintaining a price target of $185, Mohsenian cited weak U.S. sales, particularly in the Frito-Lay North America division, where increased spending on marketing hasn't driven significant growth.
Moreover, PEP's shares edged up marginally on Jul. 11 after announcing its Q2 earnings report. Despite beating earnings expectations, weaker-than-expected revenue and declining sales volumes in North America dampened the market’s response.
Analysts remain cautiously optimistic about PepsiCo’s stock, with an overall “Moderate Buy” consensus rating. Out of 18 analysts covering the stock, nine remain upbeat, advising a “Strong Buy” rating, and the remaining nine suggest a “Hold.”
The average analyst price target for PepsiCo is $185.94, indicating a potential upside of 9.4% from the current price levels.
On the date of publication, Kritika Sarmah 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.
