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Making Sense of PepsiCo’s Share Price Movement in 2015

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PepsiCo’s share price performance

As of July 2, PepsiCo’s (PEP) share price has increased by 0.2% since the beginning of 2015, to $94.66. The share price of rival Coca-Cola (KO) fell 6.3%, while Dr Pepper Snapple’s (DPS) rose 3.6%.

The Consumer Staples Select Sector SPDR Fund (XLP) has fallen 0.4% during the same period. Beverage companies like PepsiCo account for more than 19.8% of XLP.

The S&P 500 Index has risen 0.9% during the same time. The SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index, invests about 9.4% of its fund holdings in the consumer staples sector, which includes food and beverage companies.

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Stock movement since 1Q15 results

PepsiCo’s share price fell 1.1% since the announcement of its 1Q15 results on April 23. The company’s net revenue fell 3.2% to $12.2 billion in 1Q15. The adjusted earnings per share, which excludes the impact of non-recurring items, rose 2.5% to $0.83. The results for PepsiCo and Coca-Cola, which both have a global presence in more than 200 countries, continue to be impacted by currency fluctuations as the dollar gets stronger against major currencies.

Where does PepsiCo’s valuation stand?

As of July 2, PepsiCo was trading at a forward price-to-earnings (or PE) ratio of 20.2x. The company’s valuation has fallen 2.3% since the announcement of its 1Q15 results on April 23. However, valuation rose 4% compared to the beginning of the year.

Valuation for Coca-Cola, which is currently trading at a forward PE ratio of 19.3x, has fallen 8.1% since the beginning of the year. Coca-Cola is facing pressure due to the softness in the demand for sparkling beverages, which represent more than 70% of the company’s worldwide unit case volume. Dr Pepper Snapple is currently trading at 18.4x, down 0.2% since the beginning of 2015.

Softness in the demand for carbonated beverages has affected the performance of these major companies. PepsiCo’s strong presence in the snack food market and its expansion in the non-carbonated beverage category are expected to boost its future sales.

For more earnings overviews and analyses, visit our Nonalcoholic Beverages page.

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