PepsiCo (PEP) Cut to Sell at Zacks Investment Research

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Zacks Investment Research lowered shares of PepsiCo (NASDAQ:PEP) from a hold rating to a sell rating in a report released on Thursday, Zacks.com reports.

According to Zacks, “Although PepsiCo outpaced the industry in the past year, owing to robust surprise trend, investors continue to remain wary of the soft earnings view for 2019. Unfavorable impacts of ongoing investments to strengthen business, higher tax rate, and the absence of asset sale and refranchising gains that occurred in 2018 are likely to weigh on PepsiCo’s earnings in 2019. Consequently, it estimates core constant-currency EPS to decline nearly 1% and reported EPS to be down 3% in 2019. Further, adverse currency rates are likely to hurt the company’s top and bottom lines in 2019. However, PepsiCo reported earnings and sales beat in first-quarter 2019, driven by strong gains in international and FLNA segments. With this, it reported sales beat in seven of the last eight quarters and positive earnings surprise in 12 of the last 13 quarters. The company’s productivity savings goal of at least $1 billion annually through 2023 also bodes well.”

A number of other analysts have also weighed in on the stock. Macquarie raised shares of PepsiCo from a neutral rating to an outperform rating and set a $126.00 price objective on the stock in a research report on Tuesday, February 19th. Barclays reissued a hold rating and issued a $111.00 price objective (up from $104.00) on shares of PepsiCo in a research report on Monday, February 18th. Credit Suisse Group initiated coverage on shares of PepsiCo in a research report on Wednesday, March 6th. They issued an underperform rating and a $100.00 price objective on the stock. Jefferies Financial Group increased their price objective on shares of PepsiCo to $119.00 and gave the stock a hold rating in a research report on Tuesday, February 19th. They noted that the move was a valuation call. Finally, Cowen increased their price objective on shares of PepsiCo from $124.00 to $133.00 and gave the stock an outperform rating in a research report on Tuesday, February 19th. Two analysts have rated the stock with a sell rating, thirteen have given a hold rating and nine have assigned a buy rating to the company’s stock. The stock presently has an average rating of Hold and an average target price of $123.00.

PepsiCo stock opened at $127.09 on Thursday. The company has a debt-to-equity ratio of 1.99, a quick ratio of 0.85 and a current ratio of 0.94. PepsiCo has a 1-year low of $95.94 and a 1-year high of $128.26. The stock has a market capitalization of $178.16 billion, a P/E ratio of 22.45, a PEG ratio of 3.12 and a beta of 0.65.

PepsiCo (NASDAQ:PEP) last posted its quarterly earnings data on Wednesday, April 17th. The company reported $0.97 earnings per share for the quarter, topping the Zacks’ consensus estimate of $0.92 by $0.05. PepsiCo had a net margin of 19.37% and a return on equity of 65.12%. The company had revenue of $12.88 billion for the quarter, compared to analyst estimates of $12.68 billion. During the same period in the prior year, the company posted $0.96 EPS. The firm’s revenue for the quarter was up 2.6% on a year-over-year basis. Sell-side analysts expect that PepsiCo will post 5.51 EPS for the current fiscal year.

The business also recently announced a quarterly dividend, which was paid on Friday, March 29th. Shareholders of record on Friday, March 1st were paid a $0.9275 dividend. The ex-dividend date of this dividend was Thursday, February 28th. This represents a $3.71 dividend on an annualized basis and a yield of 2.92%. PepsiCo’s dividend payout ratio is currently 65.55%.

In other PepsiCo news, CEO Vivek Sankaran sold 13,000 shares of the company’s stock in a transaction dated Thursday, March 7th. The shares were sold at an average price of $117.28, for a total value of $1,524,640.00. Following the transaction, the chief executive officer now directly owns 90,379 shares in the company, valued at approximately $10,599,649.12. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this hyperlink. 0.28% of the stock is owned by corporate insiders.

A number of hedge funds have recently modified their holdings of PEP. Vanguard Group Inc. boosted its stake in PepsiCo by 1.4% in the third quarter. Vanguard Group Inc. now owns 119,706,640 shares of the company’s stock valued at $13,383,201,000 after acquiring an additional 1,595,038 shares in the last quarter. Vanguard Group Inc boosted its stake in PepsiCo by 1.4% in the third quarter. Vanguard Group Inc now owns 119,706,640 shares of the company’s stock valued at $13,383,201,000 after acquiring an additional 1,595,038 shares in the last quarter. BlackRock Inc. boosted its stake in PepsiCo by 2.4% in the fourth quarter. BlackRock Inc. now owns 97,102,071 shares of the company’s stock valued at $10,727,836,000 after acquiring an additional 2,275,511 shares in the last quarter. Oregon Public Employees Retirement Fund boosted its stake in PepsiCo by 10,622.9% in the fourth quarter. Oregon Public Employees Retirement Fund now owns 34,704,199 shares of the company’s stock valued at $314,000 after acquiring an additional 34,380,553 shares in the last quarter. Finally, Northern Trust Corp boosted its stake in PepsiCo by 3.2% in the fourth quarter. Northern Trust Corp now owns 20,185,841 shares of the company’s stock valued at $2,230,132,000 after acquiring an additional 623,727 shares in the last quarter. Institutional investors and hedge funds own 72.30% of the company’s stock.

PepsiCo Company Profile

PepsiCo, Inc operates as a food and beverage company worldwide. The company's Frito-Lay North America segment offers branded dips; Cheetos cheese-flavored snacks; and Doritos tortilla, Fritos corn, Lay's potato, Ruffles potato, and Tostitos tortilla chips. Its Quaker Foods North America segment provides cereals, rice, pasta, mixes and syrups, granola bars, grits, oat squares, oatmeal, rice cakes, simply granola, and side dishes under the Aunt Jemima, Cap'n crunch, Life, Quaker Chewy, Quaker, and Rice-A-Roni brands.

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