PepsiCo, Inc. PEP is expected to register top-line growth when it reports second-quarter 2022 numbers on Jul 12, before the opening bell. The Zacks Consensus Estimate for second-quarter revenues is pegged at $19.77 billion, implying 2.9% growth from the year-ago quarter's reported figure.

For quarterly earnings, the Zacks Consensus Estimate is pegged at $1.72, suggesting flat earnings results compared with the prior-year quarter. The consensus mark has been unchanged in the past 30 days.

In the last reported quarter, the company reported an earnings beat of 4.03%. It has delivered an earnings surprise of 5.2%, on average, in the trailing four quarters.

PepsiCo, Inc. Price and EPS Surprise

PepsiCo, Inc. price-eps-surprise | PepsiCo, Inc. Quote

Key Factors to Note

PepsiCo has been gaining from the resilience and strength in its global beverage and convenient food businesses. Market share growth in the liquid refreshment beverage category, with share gains in the carbonated soft drinks, Ready-to-Drink Tea and water categories, are likely to have aided growth in the beverage category. Investments in innovation, pricing and execution also bode well.

Meanwhile, the food business has been benefiting from revenue growth across key trademark brands like Doritos, Lay’s, Ruffles, and Cheetos. Revenues for the Quaker business have been gaining from market share gains in the rice and pasta, lite snacks, ready-to-eat cereal, and snack bar categories as it continues to capitalize on the elevated demand for tasty products that deliver convenience and value.

The company’s second-quarter revenues are likely to have gained from volume growth and robust price/mix. Strong realized prices across all segments are expected to have resulted in pricing gains in the quarter. On a segmental basis, the company has been witnessing revenue growth across all segments, which is expected to have continued in the second quarter.

Moreover, PepsiCo’s bottom line has been benefiting from cost-management and revenue-management initiatives, which have been offsetting the ongoing inflationary pressures. The company’s investments in brands, go-to-market systems, supply chains, manufacturing capacity and digital capabilities to build competitive advantages have been boosting the top and bottom lines.

Delivering convenience, variety and value proposition to customers through its brands have been the key to reporting a strong quarterly performance, which is expected to have continued in the to-be-reported quarter.

However, PepsiCo has been witnessing margin pressures, driven by the impacts of supply-chain disruptions and inflationary labor, transportation and commodity costs. PEP anticipates incremental input cost inflation for the balance of 2022. The aforementioned factors are expected to have weighed on its gross and operating margins in the to-be-reported quarter.

Zacks Model

Our proven model does not conclusively predict an earnings beat for PepsiCo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PepsiCo has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

MGP Ingredients MGPI has an Earnings ESP of +8.37% and it currently sports a Zacks Rank of 1. The company is likely to register a decline in the top and bottom lines when it reports second-quarter 2022 numbers. The consensus mark for MGPI’s quarterly earnings has moved up 4.8% in the past seven days to 88 cents per share. The consensus estimate suggests a 30.7% decline from the year-ago quarter’s reported number.

You can see the complete list of today’s Zacks #1 Rank stocks here.

MGP Ingredients’ top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $170.3 million, which suggests a decline of 2.7% from the figure reported in the prior-year quarter.

Archer Daniels Midland ADM currently has an Earnings ESP of +3.80% and a Zacks Rank of 3. The company is likely to register an increase in the top and bottom lines when it reports second-quarter 2022 results. The consensus mark for ADM’s quarterly revenues is pegged at $25.2 billion, which suggests a rise of 9.8% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Archer Daniels’ second-quarter earnings has moved up 6.3% to $1.69 per share in the past 30 days. The consensus estimate for ADM indicates a 27.1% increase from $1.33 reported in the year-ago quarter.

Philip Morris International PM currently has an Earnings ESP of +1.77% and a Zacks Rank of 3. The company is likely to register a decline in the top and bottom lines when it reports second-quarter 2022 results. The consensus mark for PM’s quarterly revenues is pegged at $6.53 billion, which suggests a 14% decline from the figure reported in the prior-year quarter.

The consensus mark for Philip Morris’ quarterly earnings has moved up by a penny in the past 30 days to $1.23 per share. The consensus estimate for PM’s second-quarter earnings suggests a decline of 21.7% from the year-ago quarter’s reported figure.

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