The fact that PepsiCo stock isn't rallying after a better-than-expected report says a lot, suggesting that its year-to-date rally of almost 20% is making it hard for investors to bid the name higher.
That's as earnings of $1.54 a share beat estimates by 2 cents, but declined more than 4% year over year. Revenue rose 2.2% to $16.45 billion, which was in-line with analysts' expectations.
On the plus side, organic revenue jumped 4.5%, while gross margins climbed 70 basis points. On the downside though, operating margins fell 130 basis points, sapping some of investors' optimism around profitability.
Management maintained its outlook for the full year as it still expects organic revenue growth of 4% (down slightly from this quarter) and earnings of $5.50 a share, which is slightly below consensus expectations of $5.53.
Overall, it was an OK quarter and it was mostly in-line with expectations. The fact that the stock is hanging around these elevated levels could even be viewed as good price action for the bulls as they digest the latest results.
In that regard, let's take a closer look at the charts.
Trading PepsiCo Stock
Shares of Coca-Cola (KO - Get Report) fell roughly the same amount as PepsiCo in Tuesday's session, as the beverage makers try to hold up near their highs on the chart. However, investors really want to know whether these stocks can push higher to new highs.
For PepsiCo stock to do that it needs to close above $134. While the stock has shot above this level before it hasn't been able to close above this mark. If it can, it puts the $135.24 highs on the table and a move to possibly higher levels from there.
I would like to see the $132 level hold as support, which is more or less in-line with the 20-day moving average. This moving average hasn't been perfect, but it has been guiding PEP stock higher since February.
This is an old, blue-chip dividend name, so it may need to rest after such a big move over the past few months. After all, it's not like robust growth is driving it higher.
If PepsiCo stock is indeed too tired to keep going higher, there are some support levels to watch below. The first is $130 and the 50-day moving average. Below that is the 38.2% retracement for 2019 at $123.74. Finally, the 200-day moving average comes into play near $117, although it's trending higher.
For the record, I wouldn't get overly bearish on PepsiCo stock unless the charts really start to roll over. Keep in mind how well this stock did throughout May when just about every other stock was getting pounded. Same goes for Coca-Cola shares.