PepsiCo Q3 preview: Where next for PepsiCo shares?
Joshua Warner October 4, 2021 9:44 PM
PepsiCo has performed well over a tough 18 months as people continued to consume its snacks and beverages during lockdown, but investors are hoping there is plenty of upside potential as out-of-home markets bounce back.
When will PepsiCo release Q3 results?
PepsiCo will release third quarter earnings before US markets open on Tuesday October 5.
PepsiCo Q3 earnings preview: what to expect from the results
PepsiCo, known for its soft drinks but also the seller of other big brands including Lay’s crisps and Tropicana juices, is expected to report 4.2% year-on-year core EPS growth in the third quarter, marking a significant slowdown from the 30% growth delivered in the second quarter when it benefited from weaker comparatives.
Analysts are expecting third quarter revenue to rise to $19.39 billion from $18.09 billion the year before, with core EPS forecast to rise to $1.73 from $1.66. Reported EPS at the bottom-line is anticipated to increase to $1.70 from $1.65. Notably, PepsiCo has beaten expectations when it comes to core EPS for the last 10 consecutive quarters.
The strong growth delivered in the previous quarter prompted PepsiCo to raise its full year guidance in July, with the firm now chasing annual organic revenue growth of 6% and core EPS growth of 12%.
The strong performance in the last quarter was driven by a significant improvement across all of its divisions as they bounced back from the pandemic-hit quarter a year earlier, with volumes and prices improving across the board apart from its Quaker Foods North America segment, which is coming up against tougher comparatives than the wider business after business boomed last year.
The firm’s snacks and beverages are expected to have continued to benefit from resilient demand from customers at home, with investors hoping the reopening of out-of-home venues like restaurants and bars can provide a catalyst. PepsiCo has said it expects its snacks and beverage businesses in North America to remain resilient going forward and benefit as the economy reopens, and said it was continuing to perform well overseas despite the uneven recovery across different geographies. However, with vaccinations progressing and restrictions being eased, the international arm boasts plenty of upside potential as economies bounce back.
The 23 brokers that cover PepsiCo are bullish on the stock with an average Buy rating and a target price of $166.19, implying there is over 10% potential upside from the current share price.
Where next for the PepsiCo share price?
PepsiCo rallied hard from March hitting an all time high of 159.60 on August 20th. Since then, the price has been trending lower. It trades below its multi-week falling trendline resistance. A move below the 50 & 100 sma and the bearish picture on the RSI are keeping the sellers optimistic of further downside.
Immediate support can be seen at 150, with a break below this level opening the door to 144 the late June low.
Any recovery in the share price would need to retake the 100 sma at $152 in order to attack the falling trendline resistance at $154 and the 50 sma at 155. A move above this level could see the buyers gain momentum and head towards $159 and fresh all-time highs.
How to trade PepsiCo shares?
You can trade PepsiCo shares with City Index in just four easy steps:
- Open a City Index account, or log-in if you’re already a customer.
- Search for ‘PepsiCo’ in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.