Preview: What to Expect From PepsiCo’s Earnings Next Week

The Harrison, New York-based global food and beverage leader PepsiCo is expected to report its fourth-quarter earnings of $1.52 per share, which represents year-over-year growth of over 3% from $1.47 per share seen in the same period a year ago.

The U.S. multinational food, snack, and beverage corporation would post revenue growth of about 9% to $24.35 billion. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

The company revised its organic revenue growth to 8% from 6% previously. The company estimates core earnings of $6.20 per share for 2021, compared to $5.52 in 2020, according to ZACKS Research.

PepsiCo struggles with supply-chain headwinds that have caused it to increase costs and limit its output. Investors will want to know whether the beverage company is winning this battle when it reports its financial results for the fourth quarter of 2021 on Thursday, February 10.

PepsiCo stock traded 0.71% lower at $171.43 on Monday. The stock fell over 1.3% so far this year after surging over 17% in 2021.

Analyst Comments

“For the quarter, we are expecting PepsiCo (PEP) to deliver EPS of $1.47, which implies flat YoY growth and is 4 pennies below consensus EPS of $1.51. Our $1.47 4Q21 estimate implies FY21 EPS of $6.20, which is at the low end of management’s expectation to deliver “at least” $6.20 in EPS and may ultimately prove conservative given PepsiCo’s (PEP) history of outperforming expectations. Since 1Q18, we can see that PEP’s reported EPS has come in above consensus in 14 out of the past 15 quarters, with an average upside surprise of+5%,” noted Vivien Azer, equity analyst at Cowen.

“As we are already almost a month into the new year, all eyes will be on PepsiCo’s (PEP) initial FY22 guidance. As a reminder, on the last earnings call management noted that at the time they expected FY22 performance to be in line with its stated long-term targets, which means MSD (+4-6%) organic revenue growth and HSD core constant currency EPS growth.”

PepsiCo Stock Price Forecast

Six analysts who offered stock ratings for PepsiCo in the last three months forecast the average price in 12 months of $177.83 with a high forecast of $195.00 and a low forecast of $165.00.

The average price target represents a 3.75% change from the last price of $171.40. Of those six analysts, two rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $172 with a high of $200 under a bull scenario and $114 under the worst-case scenario. The investment bank gave an “Overweight” rating on the beverage company’s stock.

“We are Overweight on PepsiCo (PEP). We believe Pepsi has sustainably accelerated organic sales growth with favourable execution changes (including reinvestment in marketing/cap-ex), a mix shift to the higher growth snacks business, improving share trends in beverages, and higher growth M&A contribution. This higher growth level is not fully factored into valuation, with Pepsi at an EV/EBITDA discount to large-cap peers,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. Credit Suisse raised the target price to $166 from $157. Cowen and company lifted the target price to $200 from $185. Jefferies upped the target price to $180 from $162. Guggenheim increased the target price to $186 from $175.

Technical analysis suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

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