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Will PepsiCo Deliver Strong 1Q17 Earnings?

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Will PepsiCo Deliver Strong 1Q17 Earnings? PART 1 OF 5

Will PepsiCo’s Stock Benefit from 1Q17 Results?

YTD stock gain

Snack and beverage giant PepsiCo (PEP) is scheduled to announce its fiscal 1Q17 results on April 26. Fiscal 1Q17 ended on March 25, 2017. As of April 19, PepsiCo’s stock has risen 8.6% on a YTD (year-to-date) basis. PepsiCo has outperformed the S&P 500 Index (SPY), which has risen 4.4% since the start of the year.

Will PepsiCo’s Stock Benefit from 1Q17 Results?

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Comparison with peers

PepsiCo’s stock price is up 6.5% since the announcement of its 4Q16 results in February 2017. On a YTD basis, the company has outperformed the stocks of nonalcoholic beverage peers Coca-Cola (KO), Dr Pepper Snapple (DPS), and Monster Beverage (MNST), which have risen 4.3%, 8.5%, and 1.7%, respectively, as of April 19.

PepsiCo has also outperformed the S&P 500 Consumer Staples Index, which has risen 6.7% on a YTD basis. PepsiCo constitutes 4.9% of the Consumer Staples Select Sector SPDR Fund (XLP).

Past performance

PepsiCo’s revenue fell 0.4% in 2016. The company is facing business pressures in the form of currency headwinds and softness in soda volumes. According to the trade publication Beverage Digest, US soda volumes fell 0.8% in 2016, marking the twelfth consecutive year of decline.

PepsiCo and Coca-Cola are now looking for growth in the still or noncarbonated beverages category, which includes healthier choices like bottled water, ready-to-drink tea, and juices. PepsiCo is also focusing on expanding healthier offerings in its snack food business.

Series overview

With PepsiCo’s 1Q17 results around the corner, we’ll discuss analysts’ expectations for PepsiCo’s revenue and earnings in this series. We’ll also discuss analysts’ recommendations and valuation for PepsiCo’s stock.

We’ll discuss PepsiCo’s revenue expectations in the next part.

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