PepsiCo's EPS seen flat as investors eye consumer spending
PEP•PepsiCo is expected to report adjusted third-quarter EPS of $2.29, unchanged from a year earlier, on revenue of $24.96 billion, up about 4%. Investors are watching for signs of pressure from tighter consumer budgets ahead of results due Thursday.
1. Earnings expectations
Wall Street expects PepsiCo to post adjusted EPS of $2.29 for the third quarter, unchanged year over year, as revenue rises about 4% to $24.96 billion. The company is due to report results before the bell Thursday.
2. Consumer budget pressure
In the prior quarter, PepsiCo beat revenue estimates but warned that performance in North America was moderating as consumer budgets tightened. The company is also grappling with cost pressures and the threat of GLP-1 weight-loss drugs as it works toward growth and margin targets set after activist investor Elliott Management took a roughly $4 billion stake a year ago.
3. Shares and analyst views
PepsiCo shares fell 1.4% Wednesday to $124.02 and were down about 14% year to date. The stock recently traded at 14 times forward earnings, below its five-year average of 21 times. Among 25 analysts, seven rated the stock buy or strong buy, 17 hold and one sell; the median price target was $152, down from $170 on July 7.
