PepsiCo is set to report its Q1 2024 results, with expectations of adjusted revenues of $18.2 billion and earnings at $1.55 per share. The company is likely benefitting from better pricing strategies, particularly for smaller-sized products. Analysts believe that PepsiCo’s stock still has some room for growth based on these positive trends and their interactive dashboard analysis provides more insights into the company’s expected performance for the quarter.
Over the past few years, PepsiCo’s stock has seen gains of 15% amidst fluctuations in performance. While the stock underperformed the S&P 500 in 2021 and 2023, it has been challenging for individual stocks to consistently beat the market benchmark. However, the Trefis High Quality Portfolio, consisting of 30 stocks, has outperformed the S&P 500 each year during the same period, indicating better returns with less risk compared to individual stocks.
In light of the current uncertain macroeconomic environment with high oil prices and elevated interest rates, there is speculation on whether PepsiCo may face a similar situation as in 2021 and 2023 where it underperformed the S&P 500. From a valuation perspective, analysts believe that PepsiCo’s stock has potential for growth, estimating a valuation of $186 per share, reflecting a 10% upside from its current price of around $170. This forecast is based on a P/E multiple of 23x and expected earnings for the full year 2024.
In the upcoming quarter, PepsiCo is expected to benefit from better pricing trends, although a weak consumer spending environment may impact overall performance. Analysts do not anticipate significant growth in revenue or earnings. The company has guided for at least 4% sales growth on an organic basis in 2024, with reported sales growth expected to be lower due to a stronger U.S. dollar.
In the previous quarter, PepsiCo reported a 4.5% organic growth in revenue driven by a 9% increase in pricing, offsetting a 4% decline in volume. Europe and Africa, Middle East, and South Asia segments saw sales growth of 10% and 11%, respectively, while Latin America experienced sales growth of 8% despite adverse currency translation. The company’s adjusted operating margin improved by 97 bps year-over-year to 11.4% in Q4, leading to a 7% increase in bottom-line earnings to $1.78 per share on an adjusted basis.
While PepsiCo’s stock shows potential for growth, it is essential to consider how the company’s peers are performing on key metrics. Comparisons with other companies in the industry can provide valuable insights for investors. Overall, analysts are optimistic about PepsiCo’s performance in Q1 2024 and believe that the company’s stock has room for growth based on its revenue and earnings trends.
