PepsiCo (NASDAQ:PEP) PEP shares have popped 12% since March 4 to double its industry and the S&P 500. The beverage and packaged food power is coming off a strong 2020 and PEP’s growth outlook appears even better. This means investors might want to consider buying PepsiCo stock with it set to release its first quarter fiscal 2021 financial results on April 15.
PepsiCo’s Pitch
PepsiCo’s offerings include its namesake brand, Gatorade, Frito-Lay, Quaker, Tropicana, and SodaStream. The range of areas and items makes its portfolio more diverse than beverage rival Coca-Cola (NYSE:KO) KO, and it continues to try to innovate and better adapt to changing consumer habits.
PEP landed a partnership with Beyond Meat (NASDAQ:BYND) BYND in January that creates “a joint venture to develop, produce and market innovative snack and beverage products made from plant-based protein.” The deal helps PepsiCo better position itself to enter a fast-growing market. And the space could be a real game-changer if consumers buy into Beyond Meat’s broader sustainability pitch.
The company’s wide stable of products helped PepsiCo’s 2020 revenue jump 5% to come in at $70.4 billion. This topped FY19’s 4% sales expansion and marked the firm’s best top line growth since fiscal 2011, as consumers gravitated to its offerings during the pandemic that saw retailers like Target TGT and Walmart (NYSE:WMT) WMT thrive.
Other Fundamentals
Looking ahead, Zacks estimates call for PEP’s FY21 revenue to climb 7% higher to $75.2 billion, with FY22 set to jump another 4.5%. At the bottom end, PEP’s adjusted earnings are projected to climb by 9.4% this year and another 8% next year. And the company has consistently beaten our quarterly EPS estimates.
Meanwhile, PEP shares have jumped 37% in the last five years to crush the Consumer Staples sector’s 5% and Coca-Cola’s 13% climb. As we mentioned at the start, PepsiCo stock has jumped 12% since early March and it closed regular trading Monday at $143.16 a share. Despite the recent positivity, PEP sits about 4% below its late-December records.
On the valuation front, PEP trades at a solid discount to the Beverages industry and its rival KO in terms of both forward earnings and sales. Plus, the company’s 2.9% dividend yield doubles the S&P 500 and crushes the recently-rising 30-year U.S. Treasury’s 2.4%. And PepsiCo executives are set to raise its annualized dividend by 5%, starting with the June 2021 dividend payment.
Bottom Line
PepsiCo’s earnings revisions activity helps it earn a Zacks Rank #3 (Hold) at the moment. The consumer staples giant also lands “B” grades for Value, Growth, and Momentum in our Style Scores system. Therefore, investors might want to consider adding it to their portfolio for stability, dividends, and more.
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