Companies and Brands

Will Pepsi Keep Hitting New Highs After Q4 Results?

Chris Lange

Published: February 12, 2020 1:15 pm

Last Updated: February 12, 2020 1:16 pm

PepsiCo Inc. (NASDAQ: PEP) is set to report its fourth-quarter financial results before the opening bell on Thursday. The consensus estimates call for $1.44 in earnings per share (EPS) and $20.27 billion in revenue. The same period of last year reportedly had $1.49 in EPS and $19.52 billion in revenue.

PepsiCo has found it difficult to find new avenues of growth in recent years, and the beverage industry is cutthroat and competitive, even if this company is a leader. However, the rising tide in the broad markets has lifted all ships, even more defensive plays like Pepsi.

This company was diversifying away from just sugar-water beverages long before soft drinks and so-called diet sodas were targeted as public health hazards. It has Frito-Lay and many snack foods that it sells, as well as many other beverage brands in water, tea, juice and the like that it can survive and thrive in almost any economic cycle. In the third quarter, PepsiCo saw solid growth across all of its segments, with Frito-Lay and Beverages seeing year-over-year revenue growth of 5.5% and 3.4%, respectively.

As of 2019, PepsiCo had raised its dividend for 47 consecutive years. Also, the company also comes with a substantial premium valuation of 26.5 times current-year earnings.

PepsiCo stock has outperformed the broad markets with a gain of 29% in the past 52 weeks. The share price is up closer to 10% in the past quarter alone.

Here’s what a few analysts had to say ahead of the report:

• Morgan Stanley has an Equal Weight rating.
• Evercore ISI rates Pepsi as Hold.
• Credit Suisse has an Underperform rating with a $126 target.
• Citigroup’s Neutral rating comes with a $143 target price.
• BMO Capital Markets rates it at Market Perform with a $133 target.
• JPMorgan has a Buy rating with a $154 price target.

PepsiCo stock traded at $146.26 on Wednesday, in a 52-week range of $111.88 to $146.74. The consensus price target is $140.59.