Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and PepsiCo, Inc. (NYSE:PEP) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Beverage and snack-food behemoth PepsiCo has been looking throughout the world to cash in on its well-established business, fighting to gain supremacy in key emerging markets. Let’s take an early look at what’s been happening with PepsiCo over the past quarter and what we’re likely to see in its quarterly report on Thursday.
Stats on PepsiCo
|Analyst EPS Estimate||$1.05|
|Change From Year-Ago EPS||(8.7%)|
|Revenue Estimate||$19.7 billion|
|Change From Year-Ago Revenue||0.9%|
|Earnings Beats in Past 4 Quarters||4|
Will PepsiCo fizz up this quarter?
Analysts have perennially underestimated PepsiCo’s earnings prospects, but they’ve nevertheless stayed resolute in their guesses this time around, keeping consensus projections constant for the past three months. The stock has done pretty well lately, though, rising 6% since early November as overall market sentiment has improved.
In its global business, Pepsi faces two very different sets of conditions. Globally, the company is fighting tooth and nail with rival The Coca-Cola Company (NYSE:KO) in an attempt to tap into growth markets, ranging from Asia to Africa and the Middle East. But in the U.S., growing concerns about obesity have led both PepsiCo and Coke to try to head off regulatory efforts by providing calorie information on vending machines and playing up their respective healthy-product lines.
One thing to watch for in Pepsi’s report is whether Pepsi will give in to pressure from investors to split itself up into its two major segments, allowing its successful snack business to separate from its sluggish soda segment, which has posted sales declines in the U.S. market recently. Mondelez International Inc (NASDAQ:MDLZ) achieved the same goal of accentuating its high-growth snack business when it spun off its Kraft Foods Group Inc (NASDAQ:KRFT) North American grocery business, which like Pepsi’s beverage business had lower growth and margins than its snack unit.
In evaluating Pepsi’s report, be sure to go beyond headline numbers to break out performance in each of the company’s business-line and geographical segments. Finding out where the growth is will be your best key to understanding the direction that Pepsi needs to move in to maximize its future profit potential.
The article PepsiCo Earnings: An Early Look originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo.
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