Let’s dig into the relative performance of PepsiCo (NASDAQ:PEP) and its peers as we unravel the now-completed Q3 beverages, alcohol, and tobacco earnings season.
These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
The 14 beverages, alcohol, and tobacco stocks we track reported a mixed Q3. As a group, revenues missed analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 2.7% below.
Luckily, beverages, alcohol, and tobacco stocks have performed well with share prices up 11.3% on average since the latest earnings results.
PepsiCo (NASDAQ:PEP)
With a history that goes back more than a century, PepsiCo (NASDAQ:PEP) is a household name in food and beverages today and best known for its flagship soda.PepsiCo reported revenues of $23.32 billion, flat year on year. This print fell short of analysts’ expectations by 1.9%. Overall, it was a slower quarter for the company with a miss of analysts’ organic revenue estimates and EBITDA in line with analysts’ estimates.
Unsurprisingly, the stock is down 10.7% since reporting and currently trades at $149.26.
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Best Q3: Philip Morris (NYSE:PM)
Founded in 1847, Philip Morris International (NYSE:PM) manufactures and sells a wide range of tobacco and nicotine-containing products, including cigarettes, heated tobacco products, and oral nicotine pouches.Philip Morris reported revenues of $9.91 billion, up 8.4% year on year, outperforming analysts’ expectations by 2.3%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ EPS estimates.
The market seems happy with the results as the stock is up 7.5% since reporting. It currently trades at $127.98.
Weakest Q3: Celsius (NASDAQ:CELH)
With its proprietary MetaPlus formula as the basis for key products, Celsius (NASDAQ:CELH) offers energy drinks that feature natural ingredients to help in fitness and weight management.Celsius reported revenues of $265.7 million, down 30.9% year on year, falling short of analysts’ expectations by 0.7%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
Celsius delivered the slowest revenue growth in the group. As expected, the stock is down 20.6% since the results and currently trades at $25.22.
MGP Ingredients (NASDAQ:MGPI)
Headquartered in Atchison, Kansas, MGP Ingredients (NASDAQ:MGPI) is a leading supplier of high-quality ingredients to the food and beverage industryMGP Ingredients reported revenues of $161.5 million, down 23.7% year on year. This result was in line with analysts’ expectations. Zooming out, it was a satisfactory quarter as it also produced a decent beat of analysts’ EBITDA estimates but a miss of analysts’ gross margin estimates.
The stock is down 39.4% since reporting and currently trades at $34.10.
Coca-Cola (NYSE:KO)
A pioneer and behemoth in carbonated soft drinks, Coca-Cola (NYSE:KO) is a storied beverage company best known for its flagship soda.Coca-Cola reported revenues of $11.95 billion, flat year on year. This number surpassed analysts’ expectations by 2.9%. It was a strong quarter as it also logged an impressive beat of analysts’ organic revenue estimates and a decent beat of analysts’ EPS estimates.
Coca-Cola delivered the biggest analyst estimates beat among its peers. The stock is down 10.7% since reporting and currently trades at $62.01.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.Want to invest in winners with rock-solid fundamentals? Check out our and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
This content was originally published on Stock Story
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