PepsiCo (PEP), a food and beverage company, will release its fourth-quarter 2021 financial results before the market opens today.
PepsiCo’s performance has been impressive thus far. The company reported excellent financial performance in the third quarter, with net revenues increasing by 9% to $20.19 billion. Meanwhile, profits per share grew 7.8% year-over-year to $1.79.
The company’s stock has increased by over 25% in the past year. A solid Q4 print might boost the stock price, so let’s take a closer look at what Wall Street experts are forecasting.
Q4 Expectations
PepsiCo is expected to report adjusted earnings of $1.52 per share in the fourth quarter, according to experts. The statistic indicates a year-over-year increase of 3.4%.
Looking at the graph, we can see that over the last two years, the company has consistently delivered higher-than-expected earnings per share.
Conflicting Analyst Forecasts on PEP’s Q4 Results
Some analysts have a favorable outlook on PepsiCo ahead of its Q4 earnings, while others choose to stay on the sidelines for the time being.
J.P. Morgan Analyst Andrea Teixeira Weighs In: Teixeira expects the increased price actions to act as a catalyst for the top-line growth in the fourth quarter. However, she believes that a more difficult operating environment, specifically supply chain problems, might have harmed the company’s Q4 performance to some extent. As a result, the analyst now anticipates PepsiCo’s organic sales increasing by just 8.4% in 4Q21, lower than her previous forecast of 8.6%.
On the bottom-line front, she anticipates consumer demand to have remained robust at the end of the year, with additional price moves reducing inflationary pressures and helping the bottom-line growth in the fourth quarter. As a result, Teixeira forecasts $1.53 in earnings per share for the fourth quarter.
Overall, Teixeira believes PepsiCo is well-positioned to generate solid organic top-line growth, thanks to a strong product mix. As a result, she kept her Buy rating on the stock and raised her price target to $185 from $171.
Robert Ottenstein of Evercore ISI Weighs Out: On the other hand, Ottenstein prefers to remain on the sidelines for the time being. Inflationary pressures, labor shortages, and supply chain issues, he says, have likely hurt the company’s margins in the fourth quarter. He maintains a Neutral rating on the stock but raises the price objective to $175 from $160.
Wall Street’s Take
On TipRanks, PepsiCo stock commands a Moderate Buy consensus rating, based on 4 Buys and 6 Holds. As for price targets, the average PEP stock price prediction of $178.60 implies 3.9% upside potential from the current levels.
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