PepsiCo (PEP) Soars 3.3%: Is Further Upside Left in the Stock?

Zacks Equity Research
·2-min read

PepsiCo (PEP) shares ended the last trading session 3.3% higher at $133.03. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 7.8% loss over the past four weeks.

PepsiCo’s stock rally is an extension of its continued innovation efforts that have been impressing investors. Despite the restrictions in the away-from-home channel, PepsiCo has been gaining from improved at-home consumption and new product introductions. In its latest innovation, the company introduced the Neon Zebra in the non-alcoholic cocktail mixer category in four flavors to capture the growth in at-home cocktail making trend. PepsiCo also launched the new Frutly juice product line for its young consumers. Also, resilience and strength in the global snacks and foods business has kept the stock in good stride.

Price and Consensus

Price Consensus Chart for PepsiCo
Price Consensus Chart for PepsiCo

This food and beverage company is expected to post quarterly earnings of $1.12 per share in its upcoming report, which represents a year-over-year change of +4.7%. Revenues are expected to be $14.59 billion, up 5.1% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For PepsiCo, the consensus EPS estimate for the quarter has been revised 2.9% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on PEP going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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