PepsiCo stock (NYSE: PEP) is up 4% in a month, while it’s up 3% year-to-date, slightly underperforming its peers, with both Keurig Dr Pepper (NYSE: KDP) and Coca-Cola (NYSE: KO) up around 8% each. Last month PepsiCo reported upbeat Q2 results, which, along with a recovery in the broader markets, has aided its stock price growth. Earlier this month, the company invested $550 million in Celsius Holdings – an energy drinks company – and entered into an agreement to control Celsius’ U.S. distribution. This move will allow PepsiCo to widen its presence in the energy drink segment after its Rockstar acquisition for $3.85 billion in 2020. Energy drink is a fast-growing market, with major beverage companies focused on gaining market share.
Of late, PepsiCo has benefited from strong sales of its snacks and packaged foods, driven by pricing growth. However, rising costs amid higher inflation, and rising oil prices weighing on the disposable income of consumers, are some of the headwinds the company and the overall industry will have to navigate through in the near term.
We find PEP stock to be fully valued at its current levels, with PepsiCo’s Valuation of $183 per share, reflecting only a 2% upside from its current market price of $179. PEP stock is already trading at 27x forward expected earnings at its current levels, compared to the last three-year average of 25x.
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But what about the near-term growth based on the stock movement over the last month?
Going by historical performance, there is a higher chance of more gains in PEP stock over the next month. PEP stock has seen a move of 4% or more 493 times in the last ten years. Of those, 291 resulted in PEP stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 291 out of 493, or a 59% chance of a rise in PEP stock over the coming month. See our analysis on PepsiCo Stock Chances of Rise for more details.
Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using the last ten years’ data
- After moving -1% or more over five days, the stock rose on 59% of the occasions in the next five days.
- After moving 2% or more over ten days, the stock rose in the next ten days on 59% of the occasions
- After moving 4% or more over a twenty-one-day period, the stock rose on 59% of the occasions in the next twenty-one days.
This pattern suggests a higher chance of a rise in PEP stock over the next five days, ten days, and one month.
PepsiCo (PEP) Stock Return (Recent) Comparison With Peers And S&P500
- Five-Day Return: CPB highest at 1.7%; MDLZ lowest at -1.4%
- Ten-Day Return: CAG highest at 3.3%; KDP lowest at -0.2%
- Twenty-One Days Return: KDP highest at 6.9%; KO lowest at 1.8%
While PEP stock looks fairly valued, it is helpful to see how PepsiCo’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
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 Coca-Cola vs. Footlocker.
Despite higher inflation and the Fed raising interest rates, PepsiCo stock has seen a rise of 3% this year. But can it drop from here? See how low PepsiCo stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.
|S&P 500 Return||0%||-13%||85%|
|Trefis Multi-Strategy Portfolio||-1%||-14%||241%|
 Month-to-date and year-to-date as of 8/25/2022
 Cumulative total returns since the end of 2016