It is anticipated that difficulties facing PepsiCo's North American operations have impacted the business's earnings in the third fiscal quarter of 2024. Now, investors should monitor how the management aims to overcome the situation, which will help to find the future price of PEP stock.
PEP's Struggle On North American Market
The weak category need in PEP's North American convenience food sector continues to affect the company's top-line profitability. Due to extreme pricing tactics that caused consumers to change their purchasing patterns in the face of economic duress, the corporation has faced decreased customer demand in its important North American regions. Consequently, the PepsiCo Beverages North America (PBNA) and Frito-Lay North America (FLNA) segments have seen soft earnings trends.
Product recalls connected to contamination issues like Salmonella have negatively impacted the QFNA market, which includes brands like Quaker Oats and a range of cereal and snack goods. These recalls have impacted the segment's efficiency, leading to lower sales and profitability over recent quarters.
PEP Global Business Outlook
Nonetheless, it is anticipated that PEP's robust global business, supported by category expansion in new and developing markets, somewhat padded the leading line in the year's third quarter. We anticipate that the firm will significantly increase organic revenue in the third quarter across all of its foreign units, including growth rates of 3% in Latin America, 10% in Europe and AMES, and in APAC for 7%.
The company's continuous holistic cost-management activities, which have been generating greater logistics and distribution productivity, should continue to pay off, as seen by the to-be-reported quarter's bottom line and profitability results.
During the last three months, PepsiCo's stock has grown slowly. In comparison, the industry and the Consumer Staples segment have increased by 8.4% and 8.9%, respectively, while the stock has increased by 4.2%. The S&P 500 index rose 2.6% in the same time frame, yet PepsiCo's share has outperformed it.
PEP Competitor Analysis
PepsiCo's stock market performance is not as good as that of its competitors, such as Keurig Dr Pepper KDP and Coca-Cola KO, whose stocks have increased by 13.1% and 12.1% respectively during the last three months. This discrepancy shows that PepsiCo's stock price has significantly dropped compared to that of its main competitors. During the same time frame, Monster Beverage MNST's stock increased 3.6%, somewhat less than PEP's gain.
Compared to the industry, PEP's stock value on a striker 12-month P/E ratio is significantly discounted. Although some investors would perceive this as a possibility, the value difference with its rivals may not be as favorable as it first seems. The decreased price could not be a chance for an initial investment but a warning of deeper problems.
Can PEP Acquisition Help Investors?
The $1.2 billion food and beverage behemoth announced its intention to purchase Garza Food Ventures, dba Siete Foods. Siete, a Texas-based company, specializes in Mexican-inspired goods such as salsas, taco seasonings, and tortilla chips. Pepsi stated that the acquisition would broaden its selection of healthier food options and enhance its portfolio by bringing in a genuine Mexican-American brand.
PEP Stock Forecast Technical Analysis
In the daily chart of PEP stock price, the recent price trades below a crucial dynamic line, suggesting a discounted zone. Primarily, any bullish possibility from this area could provide a higher return than usual.
The volume structure is still on the seller's side as the current high volume line is above the current price. Moreover, the 200 day SMA and 50 day EMA are above the current price with a bearish slope.
The current PepsiCo stock price is trading below the 169.59 crucial level, which needs to be overcome to initiate a bull run. In that case, investors should monitor how the price reacts on the 169.00 to 161.78 zone as a valid rebound is possible from this area.
On the other hand, a downside continuation might lower the price and find support from the 158.00 low.
