PepsiCo (NYSE: PEP) is scheduled to report its Q1 2022 results on Tuesday, April 26. We expect Pepsi to likely report revenue and earnings marginally above the consensus estimates. A rise in the number of social events, restaurants back to full-scale operations, and, more importantly, people venturing out, likely aided beverage sales in Q1. That said, our forecast indicates that PEP stock is currently fully valued, as discussed below. Our interactive dashboard analysis of PepsiCo Earnings Preview has additional details.
(1) Revenues expected to be above the consensus estimates
- Trefis estimates PepsiCo’s Q1 2022 revenues to be around $15.7 billion, slightly above the $15.5 billion consensus estimate.
- Both – beverages and foods – will likely drive the growth.
- However, the rise of Omicron in Q1 may result in slower growth in some of the regions.
- Looking at Q4 2021, the company saw its sales grow 12% y-o-y to $25.2 billion. This growth was driven by a 5% rise in overall volume and 7% increase in pricing.
- Our dashboard on PepsiCo Revenues has more details on the company’s top-line trajectory and its comparison with peers.
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(2) EPS likely to be marginally above the consensus estimates
- PepsiCo’s Q1 2022 adjusted earnings per share (EPS) is expected to be $1.25 per Trefis analysis, marginally above the consensus estimate of $1.23.
- The company’s adjusted net income of $2.1 billion in Q4 2021 reflected a 4% rise from its $2.0 billion figure in the prior-year quarter. The sales growth was partly offset by operating margin contraction.
- The company’s operating margins contracted 244 bps y-o-y to 10% in Q4 partly due to higher SG&A expenses.
- Our dashboard on PepsiCo’s Operating Income has more details.
- For the full-year 2022, we expect the adjusted EPS to be higher at $6.91 than the EPS of $6.25 in 2021.
(3) PEP stock looks fully valued
- We estimate PepsiCo’s Valuation to be around $175 per share, in line with the current market price.
- This represents a forward P/E multiple of 28x for the company based on our 2022 EPS forecast of $6.25.
- The P/E multiple above compares with 27x for KO and 24x for KDP stock, based on our estimates.
- Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for UniFirst vs. Coca-Cola.
|S&P 500 Return||-2%||-6%||99%|
|Trefis Multi-Strategy Portfolio||-4%||-12%||248%|
 Month-to-date and year-to-date as of 4/22/2022
 Cumulative total returns since the end of 2016