The snack and beverage giant PepsiCo (PEP) is set to release its third quarter 2024 financials on October 8. Wall Street analysts expect the company to report earnings of $2.31 per share for Q3, up 2.7% year-over-year. Also, analysts expect revenues to increase 1.9% from the year-ago figure to $23.89 billion, according to TipRanks’ data. However, the top line may have been pressured by macroeconomic conditions and the growing use of GLP-1 drugs, which suppress appetite and could negatively affect snack sales.
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Nevertheless, it’s important to highlight that PEP has a strong quarterly performance history. It has beaten earnings estimates for nine consecutive quarters (as pictured below), and it’s still possible for earnings to grow in comparison to last year’s results.
Factors to Consider Ahead of Q3
Analysts expect revenues and earnings to increase in Q3, signaling optimism for PepsiCo’s near-term performance. In addition, analysts, according to TipRanks’ Bulls Say, Bears Say tool shown below, believe that PepsiCo’s earnings performance is a key strength, with the company significantly beating EPS expectations and maintaining an 8% growth outlook.
Furthermore, the stock is trading at a lower valuation compared to its peers, which could make the stock attractive to investors.
Nevertheless, challenges persist. Bears point out that PepsiCo might fall short on organic sales growth, with estimates at 1.5% compared to the 3.5% consensus. The company is also losing U.S. market share, and if recent reinvestments don’t yield better returns, additional funding in 2025 could pressure long-term EPS. Moreover, soft demand in North America, which makes up 61% of revenue, could hurt growth targets.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can gauge options traders’ expectations for the stock post-earnings report. Based on a $155 strike price, with call options priced at $13.45 and put options at $0.05, the expected price movement, based on the at-the-money straddle is 3.41%.
Is PEP a Good Stock to Buy?
Turning to Wall Street, PEP stock has a Moderate Buy consensus rating based on four Buys and six Holds assigned in the last three months. At $182.60, the average PepsiCo price target implies 8.35% upside potential. Shares of the company have gained 3.3% in the past three months.
