Pepsi Earnings Preview

Pepsi [[PEP]] is scheduled to report their second quarter 2010 results before the market opens on Tuesday, July 20.


Last quarter, the soft drink maker reported earnings results that were only $.01 above Wall Street’s consensus estimates. PEP shares dropped 2% following the earnings announcement.


The current Wall Street consensus estimates are for revenues of $14.43 billion and EPS of $1.08. This would imply a 36% increase in revenues over last year’s $10.59 billion. However, analysts only expect profits to increase by 6%. 


Pepsi shares have gained 4% this year and have outperformed the 3% decline in the S&P 500 index. Last year, PEP shares gained 11%, but underperformed the 23% gain in the S&P 500.

Pepsi stock is currently trading at 14x consensus 2011 EPS estimates. Pepsi is expecting growth to accelerate in the second half of this year, but the company needs to deliver good second quarter results to show investors that they are still on track.

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