Should You Buy Pepsi Stock In July 2022?
July 21 2022 - 7:44AM
Finscreener.org
PepsiCo (NASDAQ: PEP)
is an international food, snack, and beverage company with
headquarters in New York. It is one of the most
recognizable brands in the world. The stock has held steady in 2022
so far, not a mean feat considering the bloodbath in the
markets.
Despite the rising inflation
levels, economic slowdowns, and the continuously rising interest
rates by the Fed, the company has lost only around 1.8%
year-to-date, while most growth stocks are well under the
pump.
PepsiCo’s stable business
processes, decent pricing policies, sustained profitability amid
rising overhead costs, and
steadily increasing
dividend payouts over the years have
attracted a lot of investor attention. Even though a potential
recession is on the way, Wall Street, in general, is quite
optimistic about PepsiCo stock’s performance.
Pepsi is a global brand
The last few quarters have seen
demand for consumer products to fall. However, Pepsi has not been
affected by any of these instances. Instead, as there is no
shortage in demand for the company’s products, Pepsi has been able
to experience strong organic growth in its
operations.
All this has been possible
because of Pepsi’s excellent pricing strategies. The owner of
brands such as Gatorade, Pepsi, Quaker Oats, and LayU+02019s, the
company has consistently outperformed its peers. Besides, its
efficient supply chain strategies and the steady stream of product
innovations have helped it to maintain its profitability and
position even at times when the shoppers had to tighten their
wallets.
If the same situation continues,
then Pepsi might be able to grab even a bigger market share in this
competitive industry.
Pepsi’s improving financials
The Russia-Ukraine war and
associated logistics issues had negatively impacted the first
quarter financials of many growth-oriented organizations
previously. However, PepsiCo has always been consistent with its
strong bottom and top-line results, very often exceeding the
expectations of the market. It has beaten the top line estimates of
the market for 15 consecutive quarters since 2018.
Last year PepsiCo impressed the
market by generating more than $89 billion in net revenue, with
each of its brands generating more than $1 billion in estimated
annual retail sales. In the
first quarter
of this year, despite all the
abnormalities, the company witnessed net revenue growth of 9.3%
along with organic revenue growth of 13.7%. The most notable
growth, however, was in its EPS, which witnessed a massive 148%
improvement compared to last year.
However, the stress in its margin
levels because of Inflationary pressures and impacted supply chains
have quite affected its recent
second quarter
financials. The net
revenue growth of PepsiCo had declined to 5.2% for the quarter,
while organic revenue growth of 13% was obtained. Besides, the EPS
had also declined by 39% to $1.03 per share.
Now, as per the current levels,
PepsiCo expects its full-year organic revenue to increase 10% from
8% and its core constant currency earnings per share to increase to
8%.
Pepsi offers a decent dividend
As major indices are performing
poorly, investors are drawn toward stocks that can boost their
income levels by paying out constant dividends. The best thing
about PepsiCo is not only its
paid dividends
consistently but has also
increased its annual dividends for around 50 consecutive
years.
In the month of May itself, it
declared a dividend of $1.15 per share, showing a 7% year-over-year
increment. Its forward dividend yield stands at 2.71% right now.
The high-profit margins of the company provide it with a sufficient
buffer to keep up its dividend commitment.
The stock closed at $170.1, and
the average consensus target for the stock is $184.77, a potential
upside of 8.62%. PepsiCo is no doubt one of the top-performing
stocks in the current market and thus can be a
buy.
Pepsi has survived the harshest
market conditions in the past owing to its excellent strategic
decisions and is expected to continue doing so in the coming times
as well. Also, if it is able to meet the market’s expectations in
its recent quarterly report, then another rewarding situation might
set in for the investors.
PepsiCo (NASDAQ:PEP)
Historical Stock Chart
From Jun 2024 to Jul 2024
PepsiCo (NASDAQ:PEP)
Historical Stock Chart
From Jul 2023 to Jul 2024