Investing

Earnings Previews: Constellation Brands, PepsiCo, RPM International

This week marks the calm before the storm. There are barely a handful of interesting earnings reports due out this week. The flood begins next week when the nation’s biggest banks deliver their quarterly numbers.

Ahead this week are results from one of the world’s largest soft-drink companies, one of its largest alcoholic beverage companies and one of its largest cannabis companies.

PepsiCo

Soft-drink and snack food maker PepsiCo Inc. (NYSE: PEP) will report third-quarter results before equities markets open on Tuesday. Over the past 12 months, the company’s stock has added about 12.6% to its share price, including more than 4% since the beginning of 2021. Since mid-August, however, the stock has given back 4.3%, or shares would be up by 8.8%.

Maybe alcohol-laced Mountain Dew, scheduled to debut from PepsiCo and Boston Beer early next year, can put some fizz back into the stock. Or maybe not — demand for hard seltzer drinks has declined.

Of 22 brokerages covering the stock, half rate the shares a Buy or Strong Buy, and another 10 give the stock a Hold rating. At a recent price of around $151, the upside potential based on a median price target of $166 is just over 10%. At the high price target of $185, the upside potential is 22.5%.

Third-quarter revenue is forecast at $19.39 billion, which would be up 0.9% sequentially and up about 7.2% year over year. Adjusted earnings per share (EPS) are forecast to rise sequentially by about 0.8% to $1.73, or a jump of 4.2% year over year. For full fiscal 2021, analysts expect PepsiCo to post revenue of $77.14 billion, up 9.6%, and EPS of $6.24, up 13%.

The stock trades at 24.3 times expected 2021 EPS, 22.6 times estimated 2022 earnings and 20.9 times estimated 2023 earnings. The stock’s 52-week trading range is $128.32 to $159.63. PepsiCo pays an annual dividend of $4.30 (yield of 2.85%).

Constellation Brands

Constellation Brands Inc. (NYSE: STZ) produces, imports and sells beer, wine and spirits in the United States and other countries. With a market cap of around $41 billion, it is the country’s largest publicly traded alcoholic beverage stock. The stock has added about 16.7% to its share price over the past 12 months, but that represents only about half its gain as of early May.