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.
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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.
In a mid-September presentation, Constellation said it will go after high-end beer and wine sales, where sales are rising, and hard seltzer beverages, where sales have not been so hot. The company’s alliance with marijuana grower Canopy Growth could pay off big-time, if the U.S. Congress ever gets around to removing the federal ban on cannabis sales. Constellation reports second-quarter fiscal 2022 results before markets open on Wednesday.
Of 24 analysts covering the company, 17 rate the stock a Buy or Strong Buy, and the other have a Hold rating on the shares. At a price of around $214.90, the upside potential based on a median price target of $266 is 23.8%. At the high price target of $300, the upside potential rises to around 39%.
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Analysts expect Constellation to report second-quarter revenue of $2.3 billion, up 13.6% sequentially and about 1.8% year over year. Adjusted EPS are pegged at $2.79, up 19.8% sequentially and three cents higher year over year. For the full fiscal year, current estimates call for EPS of $11.82, a 16.5% gain, and revenue of $8.58 billion, down about 0.4%.
The stock trades at 21.2 times expected 2022 EPS, 18.2 times estimated 2023 earnings and 16 times estimated 2024 earnings. The stock’s 52-week range is $160.63 to $244.75. Constellation pays an annual dividend of $3.04 (yield of 1.42%).
RPM International
Specialty chemicals maker RPM International Inc. (NYSE: RPM) reports first-quarter fiscal 2022 results before markets open Wednesday. Among its consumer brands are such familiar names as Rust-Oleum, Varathane and DAP. The stock posted a 52-week high in early May but has dropped by about 21% since then. Over the past 12 months, the shares are down about 3.3%.
RPM is a serial acquirer, and its fiscal 2021 cash spending of $326 million was about 50% higher than its acquisition cash spending in 2020. Over the past four quarters, RPM has posted higher-than-expected EPS in three and hit the target exactly in the fourth. Over the past 10 quarters, the company has met or exceeded EPS results every time.
Analyst sentiment on the stock is mixed. Eight of 12Â brokerages covering the stock rate it a Hold, while three give the stock a Buy or Strong Buy rating. At a price of around $78.50, the upside potential based on a median price target of $95 is 21%. At the high price target of $105, the upside potential is about 33.8%.
For the company’s first fiscal quarter of 2022, analysts are forecasting revenue of $1.63 billion, down 6.3% sequentially and up about 1.2% year over year. EPS are forecast at $1.02, down 20.5% sequentially and down 29% year over year. The current estimates for the full fiscal year call for revenue of $6.34 billion, an increase of 3.8%, and EPS of $4.00, down 3.8%.
The stock trades at 19.6 times expected 2022 EPS, 16.9 times estimated 2023 earnings and 14.5 times estimated 2024 earnings. The stock’s 52-week range is $76.43 to $99.30. RPM pays an annual dividend of $3.52 (yield of 1.94%).
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