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Will PepsiCo’s Earnings Beat Analysts’ Estimates Again in 1Q15?

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PepsiCo’s first quarter earnings release

PepsiCo (PEP) is scheduled to announce the results for the first quarter of 2015 on April 23. As of April 14, PepsiCo’s stock has declined by 3.8% to $96.6, since the company announced its fourth-quarter results on February 11, 2015. The S&P 500 Index appreciated by 1.3% over the same period. Pepsico is currently trading at a forward price-to-earnings (or PE) multiple of 20.5x, down 4.3% since the announcement of its 4Q14 results, which were affected by currency headwinds.

PepsiCo makes up ~4.5% and 0.8%, respectively, of the Consumer Staples Select Sector SPDR Fund (XLP) and the iShares Core S&P 500 ETF (IVV).

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PepsiCo is ahead of expectations

PepsiCo consistently beat analysts’ consensus estimates in all four quarters of 2014 as well as in 2013. In 4Q14, the company’s adjusted earnings per share (or EPS) increased by 6.7% to $1.12 compared to the same quarter of 2013. PepsiCo’s 4Q14 adjusted EPS, which excludes the impact of one-time items like restructuring charges, was ahead of the analyst estimate of $1.08.

However, including one-time charges, the company’s EPS were down by 22.3% to $0.87 in 4Q14 due to the impact of restructuring and impairment charges, remeasuring of the company’s Venezuelan assets, pension-related charges, and commodity mark-to-market losses.

Beverage giant Coca-Cola’s (KO) 4Q14 adjusted EPS declined by 4.3% to $0.44, from the comparable quarter of 2013 due to currency fluctuations. PepsiCo’s rival in the snack food category, Kraft Foods (KRFT), registered 74.4% growth in its 4Q14 adjusted EPS, due to strong growth in organic revenue and lower advertising and overhead costs. However, including special items, Kraft Foods reported a net loss of $398 million, or $0.68 per share, in 4Q14.

Guidance

According to guidance issued in February 2015, PepsiCo expects adjusted EPS in 2015 to come in at $4.63—unchanged from 2014. PepsiCo expects its 2015 adjusted EPS, excluding the impact of currency, to grow by 7.0%. However, currency fluctuations should offset this growth by 7.0%.

To learn more about the company’s business, read our detailed company overview series on PepsiCo.

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