Image Source: PexelsThe Q3 earnings season is just around the corner, with the big banks’ results coming next Friday. But before we get to them, a consumer staples favorite, PepsiCo (PEP – Free Report), is on the reporting docket for next week (Tuesday, October 8th) before the market opens.Let’s take a closer look at expectations for the consumer staples titan.
PepsiCo Expectations
PEP shares have largely been disappointing in 2024, up a modest 1.2% and primarily trading sideways all year. It’s worth noting here that investors have increasingly decreased exposure to Consumer Staples stocks overall in 2024 thanks to the risk-on environment that’s been led by red-hot Technology.Below is a chart illustrating the year-to-date performance of PEP shares relative to the Zacks Consumer Staples sector and the S&P 500.
Image Source: Zacks Investment ResearchAnalysts have taken their earnings expectations lower for the quarter to be reported over recent months, with the $2.30 Zacks Consensus EPS estimate down 2% since mid-July but suggesting 2.2% growth from the year-ago period.
Image Source: Zacks Investment ResearchRevenue expectations have followed a similar path, with the $23.9 billion expected down a modest 1% over the same timeframe and reflecting a 1.9% increase from the year-ago period. It’s important to note that the company’s revenue growth pace has seen a notable decline over recent periods, as shown below.Please note that the chart below tracks the YOY percentage change, not actual sales numbers.
Image Source: Zacks Investment ResearchShares aren’t expensive on a historical basis, with the current 19.6X forward 12-month earnings multiple well beneath the 23.6X five-year median and five-year highs of 27.8X. The lower multiple reflects investors’ slowing growth expectations, as mentioned above.
Are Shares a Buy?
The outlook heading into PepsiCo’s quarterly release isn’t overly positive, with analysts modestly revising their earnings and sales expectations downwards. Shares have largely been disappointing in 2024, but a positive guide would likely breathe life back into shares.This looks to be a ‘wait and see’ situation, particularly due to the downwards revisions. Still, being a more defensive stock, PEP shares likely won’t suffer a deep downwards move if results don’t match expectations.More By This Author:Bull Of The Day: Sharkninja
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