PepsiCo (PEP) Shows Signs Of Being Water-Logged And Getting Wetter
Trade-Ideas LLC identified
(
) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified PepsiCo as such a stock due to the following factors:
- PEP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $396.9 million.
- PEP has traded 4.7 million shares today.
- PEP traded in a range 212.9% of the normal price range with a price range of $2.43.
- PEP traded below its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.
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More details on PEP:
PepsiCo, Inc. operates as a food and beverage company worldwide. Its Frito-Lay North America segment offers Lay's and Ruffles potato chips; Doritos, Tostitos, and Santitas tortilla chips; and Cheetos cheese-flavored snacks, branded dips, and Fritos corn chips. The stock currently has a dividend yield of 2.9%. PEP has a PE ratio of 3. Currently there are 12 analysts that rate PepsiCo a buy, no analysts rate it a sell, and 4 rate it a hold.
The average volume for PepsiCo has been 4.7 million shares per day over the past 30 days. PepsiCo has a market cap of $152.7 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.69 and a short float of 0.7% with 1.83 days to cover. Shares are up 6.2% year-to-date as of the close of trading on Thursday.
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Analysis:
rates PepsiCo as a
. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Beverages industry and the overall market, PEPSICO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for PEPSICO INC is rather high; currently it is at 60.51%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.84% trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.5%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- PEPSICO INC's earnings per share declined by 21.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PEPSICO INC reported lower earnings of $3.67 versus $4.27 in the prior year. This year, the market expects an improvement in earnings ($4.72 versus $3.67).
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full PepsiCo Ratings Report.
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