PepsiCo (NYSE:PEP) will report its earnings for the fourth quarter of fiscal 2019 on Thursday before the market opens. Overall, 2019 was good for the company. The stock gained 24% in 2019. The company reported strong results in the third quarter. Coca-Cola (NYSE:KO) also reported strong fourth-quarter earnings on January 31. To learn more about Coca-Cola’s results, read Coca-Cola Posts Q4 Earnings, Strong Run Continues.
Analysts’ expectations for PepsiCo’s Q4 results
For the fourth quarter, analysts expect a 3.8% YoY (year-over-year) revenue growth to $20.1 billion—a rise of 18.5% sequentially. PepsiCo saw a 4.3% YoY increase in its revenue in the third quarter. Notably, higher net pricing drove the company’s revenue growth. Higher net pricing also drove Coca-Cola’s results in the third quarter.
PepsiCo beat analysts’ revenue estimates in the last two quarters. The company’s product innovation strategies and focus on introducing a variety of innovative products drove its revenue growth in 2019. PepsiCo launched a wide range of innovative beverages last year and emphasized a portfolio of healthier drinks. Meanwhile, Coca-Cola also benefited from higher pricing and a new product mix. The company saw a 14.9% YoY increase in its revenue in the third quarter and a 16% YoY increase to $9.1 billion in the fourth quarter.
For the fourth quarter, the EPS could be around $1.44—a decline of 3.6% YoY. PepsiCo could also report a gross profit of $11.0 billion. For fiscal 2019, the revenue could increase by 3.2% to $66.7 billion. However, the EPS could decrease by 2.6% to $5.5 billion.
In comparison, Coca-Cola reported an EPS of $0.44 for the fourth quarter of fiscal 2019—an increase of 2.3% YoY. For fiscal 2019, the revenue rose by 17.0% to $37.2 billion. The earnings also rose by 1.4% to $2.44 per share.
Outlook for 2020
Analysts expect PepsiCo and Coca-Cola to report YoY revenue growth for all of the quarters in fiscal 2020. We could see first and second-quarter revenue around $13.3 billion and $17.1 billion. The third and fourth-quarter revenue could increase to about $17.9 billion and $21.1 billion, respectively. For fiscal 2020, the revenue could rise by 4.3% YoY to $69.6 billion. The company’s EPS could also increase by 8.0% YoY to $5.95.
For Coca-Cola, analysts also expect YoY revenue growth in all four of the quarters in fiscal 2020. For fiscal 2020, the company could report a 4.7% YoY increase to $39.0 billion in its revenue. The company could also report a 6.7% increase in its EPS to $2.9.
Currently, analysts have a positive but stable outlook for PepsiCo stock. In January, Guggenheim increased the target price for PepsiCo to $138 from $136. Guggenheim also raised the target price for Coca-Cola stock to $61 from $59.
In 2019, PepsiCo stock rose by 23.7%, while Coca-Cola stock gained 17%. In 2020, Coca-Cola has increased by 7.9% year-to-date, while PepsiCo has risen by 6.5%.
Most analysts seem bullish on PepsiCo stock. Among the 20 analysts that cover the stock, 12 recommend a “hold,” four recommend a “buy,” three recommend a “strong-buy,” and one recommends a “sell.”
In comparison, 11 out of 22 analysts recommend a “buy” for Coca-Cola stock, three recommend a “strong-buy,” and eight recommend a “hold.” Most analysts also seem bullish on Coca-Cola stock after its strong fourth-quarter results.
Currently, the average target price on PepsiCo stock is $140.59. The target price indicates a downside potential of about 3% over the next 12 months. PepsiCo closed with a gain of 0.20% on Monday.
In comparison, analysts have an average target price of $63.5 on Coca-Cola stock, which they increased after its fourth-quarter results. The estimate implies a 6% upside potential over the next 12 months. The stock closed with a gain of 0.95% on Monday.
To learn more about Pepsico’s growth strategies, read PepsiCo: A Must-Know Overview of the Consumer Giant.
Stay with us to learn more about how PepsiCo performs in its fourth-quarter earnings.