After U.S. markets closed on Thursday, Levi Strauss reported earnings per share (EPS) that beat the consensus estimate by $0.01. It also fell about 2.2% short of the revenue estimate. The company guided lower revenue growth and EPS for the 2023 fiscal year. The stock traded down about 1.1% Friday morning.
No notable earnings reports are due Monday. Federal government offices and U.S. banks will be closed for the Columbus Day holiday. Stock exchanges will be open as usual.
By the end of next week, two Dow Jones industrial average companies will have reported quarterly earnings. Two of the nation’s largest banks will have done likewise, so stick with us.
Here is a look at what to expect when a high-profile consumer staples giant reveals third-quarter earnings before U.S. markets open on Tuesday.
PepsiCo
Snack food and soft-drink maker PepsiCo Inc. (NASDAQ: PEP) has seen its stock price decline by about 3.6% over the past 12 months, all due to a decline of more than 11% for the year to date. The stock has dropped 16% since late July.
Pepsi and the entire staples sector have suffered a major stock price decline as consumers have cut their purchases of what Steve Jobs once called “sugar water” and other sugary food and beverage products. The rise of weight-loss drugs like Ozempic and Wegovy has spooked investors, and even reliable dividend payers like Pepsi have felt the effects of rising Treasury notes.
Raising prices has allowed PepsiCo to maintain margins, but that avenue may also be closed. The company may be forced to rely on volume growth to keep profits and dividends up. How PepsiCo plans to meet these challenges is likely to be a key part of Tuesday’s earnings report.
Analysts’ Ratings and Estimates
Of 20 brokerages covering PepsiCo, 10 have a Hold rating and another eight rate the stock as a Buy or Strong Buy. At a recent price of around $160.00 a share, the upside potential based on a median price target of $192.00 is 20%. At the high price target of $220.00, the upside potential is 37.5%.
Third-quarter revenue is forecast at $23.42 billion, which would be up 4.9% sequentially and by 6.6% year over year. Adjusted EPS are forecast to rise sequentially by 3% to $2.15 and by 9.1% year over year. For the full 2023 fiscal year, analysts expect PepsiCo to post revenue of $92.41 billion, up 7%, and EPS of $7.48, up 10.2%.
PepsiCo stock trades at 21.4 times expected 2023 EPS, 19.9 times estimated 2024 earnings of $8.06 and 18.4 times estimated 2025 earnings of $8.69 per share. Its 52-week trading range is $159.87 to $196.88. The low was posted on Thursday. PepsiCo pays an annual dividend of $4.83 (yield of 2.88%). Total shareholder return for the past year was negative 0.92%.
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