PepsiCo (NASDAQ:PEP) is scheduled to announce its earnings on Thursday, April 24, 2025. Historically, the company’s stock (PEP) has often experienced a positive price movement following its earnings releases. Over the past five years, PEP stock has shown a positive one-day return after earnings in 84% of the instances, with a median positive return of 1.3% and a maximum one-day positive return of 3.6%.
For event-driven traders, understanding these historical patterns could offer a potential edge. There are generally two approaches to consider:- Pre-Earnings Positioning: Analyze the historical probability of a positive reaction and establish a position before the earnings announcement.
- Post-Earnings Correlation Analysis: Examine the correlation between the immediate stock reaction and medium-term returns after the earnings are released, and then position accordingly.
Current consensus estimates project earnings per share (EPS) of $1.50 on sales of $17.74 billion. This compares to the prior year’s earnings of $1.61 per share on sales of $18.25 billion. The anticipated decline can likely be attributed to an expected continued decrease in North American volumes, as consumers remain cautious with their spending.
From a fundamental perspective, PepsiCo currently has a market capitalization of $194 billion. Its revenue over the trailing twelve months was $92 billion, and the company demonstrated operational profitability with $13 billion in operating profits and a net income of $9.6 billion.
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PepsiCo’s Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post-earnings returns:
- There are 19 earnings data points recorded over the last five years, with 16 positive and 3 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 84% of the time.
- Notably, this percentage increases to 92% if we consider data for the last 3 years instead of 5.
- Median of the 16 positive returns = 1.3%, and median of the 3 negative returns = -0.8%
Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
PEP 1D, 5D, and 21D post-earnings return
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
PEP Correlation Between 1D, 5D and 21D Historical Returns
Is There Any Correlation With Peer Earnings?
Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of PepsiCo stock compared with the stock performance of peers that reported earnings just before PepsiCo. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
PEP Correlation With Peer Earnings
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
