PepsiCo (PEP) Stock Falls Amid Market Uptick: What Investors Need to Know

In the latest trading session, PepsiCo (PEP) closed at $157.72, marking a -1.35% move from the previous day. The stock fell short of the S&P 500, which registered a gain of 1.01% for the day. Meanwhile, the Dow experienced a rise of 0.83%, and the technology-dominated Nasdaq saw an increase of 1.22%.

Shares of the food and beverage company have depreciated by 3.65% over the course of the past month, outperforming the Consumer Staples sector's loss of 6.6%, and lagging the S&P 500's loss of 2.86%.

The investment community will be paying close attention to the earnings performance of PepsiCo in its upcoming release. The company's earnings per share (EPS) are projected to be $1.54, reflecting a 4.05% increase from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $18.93 billion, up 5.63% from the year-ago period.

For the full year, the Zacks Consensus Estimates are projecting earnings of $8.56 per share and revenue of $97.96 billion, which would represent changes of +5.16% and +4.29%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for PepsiCo. These recent revisions tend to reflect the evolving nature of short-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.59% lower. PepsiCo is currently a Zacks Rank #3 (Hold).

With respect to valuation, PepsiCo is currently being traded at a Forward P/E ratio of 18.67. For comparison, its industry has an average Forward P/E of 18.67, which means PepsiCo is trading at no noticeable deviation to the group.

Meanwhile, PEP's PEG ratio is currently 3.07. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As the market closed yesterday, the Beverages - Soft drinks industry was having an average PEG ratio of 2.15.

The Beverages - Soft drinks industry is part of the Consumer Staples sector. This group has a Zacks Industry Rank of 163, putting it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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