Pricing Gains To Drive PepsiCo’s Q1

+2.82%
Upside
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Market
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Trefis
PEP: PepsiCo logo
PEP
PepsiCo

PepsiCo (NYSE: PEP) will report its Q1 2023 results on Tuesday, April 25. We expect PepsiCo to likely report revenue and earnings in line with the consensus estimates. Continued pricing gains will probably drive the company’s top-line growth while volume may remain tepid. Also, our forecast indicates that PEP stock is fully valued, as discussed below. Our interactive dashboard analysis of PepsiCo Earnings Preview has additional details.

(1) Revenues expected to be in line with the consensus estimates

  • Trefis estimates PepsiCo’s Q1 2023 revenues to be around $17.2 billion, reflecting a mid-single-digit y-o-y growth, aligning with the consensus estimate. 
  • The company should continue to benefit from better price realizations, although volume growth may remain tepid.
  • Looking at Q4 2022, the company saw its sales rise 11% y-o-y to $28 billion. On an organic basis, sales were up 15%, led by a 16% contribution from pricing gains, while volume was down 2%.
  • Our PepsiCo Revenues dashboard details the company’s top-line trajectory and provides details on segments.
Relevant Articles
  1. What’s Next For PepsiCo Stock After A Q1 Beat?
  2. Will PepsiCo Beat The Consensus In Q1?
  3. What’s Next For Pepsi Stock After A Mixed Q4 And 6% Fall Last Year?
  4. After A 25% Fall In 2023 Is Campbell A Better Pick Than PepsiCo Stock?
  5. What’s Next For PepsiCo Stock After A Q3 Beat?
  6. What To Expect From PepsiCo’s Q3?

(2) EPS likely to match the consensus estimates

  • PepsiCo’s Q1 2023 adjusted earnings per share (EPS) is expected to be $1.40 per Trefis analysis, aligning with the consensus estimate of $1.39.
  • The company’s adjusted net income of $2.3 billion in Q4 2022 reflected an 8.5% rise from its $2.1 billion figure in the prior-year quarter. The sales growth was partly offset by operating margin contraction.
  • The company’s core operating margins contracted 39 bps y-o-y in Q4.
  • Our dashboard on PepsiCo’s Operating Income has more details.
  • For the full-year 2023, we expect the adjusted EPS to be higher at $7.30, compared to the $6.79 figure in 2022.

(3) PEP stock looks like it is fully valued

  • We estimate PepsiCo’s Valuation to be around $187 per share, aligning with the current market price.
  • This represents a forward P/E multiple of 26x for the company based on our 2023 EPS forecast of $7.30, and compares with the last three-year average of 25x.

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

While PEP stock looks fully 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 at how counter-intuitive the stock valuation is for PepsiCo vs. Corning.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Apr 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 PEP Return 2% 3% 77%
 S&P 500 Return 0% 7% 84%
 Trefis Multi-Strategy Portfolio 2% 10% 245%

[1] Month-to-date and year-to-date as of 4/21/2023
[2] Cumulative total returns since the end of 2016

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