Founded in 1898, New York-based PepsiCo, Inc. (PEP) spans the globe with its diverse portfolio of beverages and convenient foods. With a robust market cap of $226.7 billion, the beverage giant is expected to announce its fiscal Q2 earnings before the market opens on Thursday, July 11.
Ahead of the event, analysts expect PepsiCo to report a profit of $2.16 per share, a 3.4% jump from $2.09 per share in the year-ago quarter. The company has consistently surpassed Wall Street’s bottom-line estimates in its recent quarterly reports. Its adjusted earnings of $1.61 per share for the last reported quarter surged 7.3% year over year, beating the consensus estimate by 5.9%. This surge was driven by strong international demand for PepsiCo’s snacks and beverages, with significant sales growth in Asia Pacific and Europe, coupled with strategic price increases despite some volume decline and a challenging domestic market.
For fiscal 2024, analysts expect PepsiCo to report EPS of $8.16, up 7.1% from $7.62 in fiscal 2023. Fiscal 2025 EPS is expected to grow 8.2% annually to $8.83.
PEP stock has dipped 2.9% on a YTD basis, significantly underperforming the broader S&P 500 Index's ($SPX) 14.5% gain and the S&P 500 Cons Staples Sector SPDR’s (XLP) 6.3% return over the same time frame.
PepsiCo’s stock dip tells a story of contrast and challenge. Despite beating Q1 Wall Street's projections on both top and bottom lines with strong international demand for favorites like Cheetos and Doritos, the celebration was cut short. The Quaker Foods recall and sluggish U.S. sales cast a shadow, leading to a 3% drop in stock on April 23.
Over the past year, PepsiCo’s performance lagged behind the broader market, hampered by high inflation and economic headwinds. Yet, with a diversified portfolio – more than half of earnings from its food division – and strategic expansion in both developed and emerging markets, the company continues to push forward, even amid turbulence.
Analysts remain cautiously optimistic about PepsiCo’s stock, with an overall “Moderate Buy” consensus rating. Out of 19 analysts covering the stock, 11 remain upbeat, advising a “Strong Buy” rating, and eight suggest a “Hold.” The average analyst price target for PepsiCo is $190.29, indicating a potential upside of 15.4% from the current levels.
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