On Tuesday, PepsiCo Inc. (NASDAQ:PEP) shares edged slightly higher after announcing its most recent quarterly results. The company released its fiscal Q3 results before the market opened, beating analyst expectations on revenue and non-GAAP earnings.
However, it issued lower-than-expected earnings per share for the full year 2021, despite raising its revenue growth estimates. The company expects revenue to grow by 8% this year, up from the previous guidance of 6%. However, its FY2021 earnings guidance of about $6.20 per share is below the average Street estimate of $6.24.
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PepsiCo’s Q3 non-GAAP EPS of $1.79 beat the consensus estimate of $1.73, while revenue grew by 11.6% Y/Y to $20.19 billion, $800 million ahead of estimates.
Should you invest in PepsiCo?
PepsiCo’s P/E ratio of about 25.41 is relatively lower than close peer Coca-Cola Co.’s (NYSE:KO) equivalent of 28.40, making it a better choice for value investors. Both companies seem to have similar earnings growth expectations, with analysts forecasting an average annual EPS growth of 9.79% for PepsiCo and 10.12% for Coca-Cola, over the next five years.
Therefore, with the industry expected to experience moderate growth in the coming years, investors may look to current valuations to determine their course of action.
Therefore, it may be best to monitor the performance in the coming quarters before investing in PepsiCo shares.
Is a short term rebound in sight?
Technically, PepsiCo shares seem to be trading within a descending channel formation in the intraday chart. As a result, the stock price has plummeted closer to the oversold conditions of the 14-day RSI, creating an opportunity for a short-term rebound.
Therefore, investors could target potential rebound profits at about $153.32, or higher at $156.88. However, if the decline continues, the stock could find support at $147.01, or lower at $143.65.
Hard to bet on a rebound
In summary, with PepsiCo shares edging just slightly higher after announcing better-than-expected fiscal Q3 results, it could be difficult to find another catalyst to trigger a significant rebound.
Therefore, although the stock price is edging closer to oversold conditions, the decline could continue to the foreseeable future.
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