PepsiCo Earnings Preview: Key Levels to Watch as Stock Nears Critical Resistance

PepsiCo is preparing to report its earnings on Tuesday morning, with analysts expecting modest growth in both revenue and profits. This outlook comes after the company warned that U.S. consumers have become increasingly value-conscious, which has dampened sales in recent quarters. As inflationary pressures persist and households tighten their spending, PepsiCo has faced challenges in maintaining the same level of domestic demand.

Last quarter, the company revised its 2024 organic revenue growth projection downward to about 4%, slightly lower than its previous expectation of at least 4%. This adjustment was driven by a shift in consumer behavior in the U.S., where shoppers have become more cautious with their spending.

Analysts estimate PepsiCo’s fiscal third-quarter revenue to reach $23.83 billion, a slight increase from $23.45 billion during the same period last year. CEO Ramon Laguarta has noted that consumers across all income levels are changing their shopping habits, prompting PepsiCo to evaluate which of its brands might need more value offerings to retain customer loyalty. Despite the challenges in the U.S. market, the company’s net income is expected to rise slightly to $3.14 billion from $3.09 billion, reflecting an ongoing effort to adapt to shifting consumer preferences.

In the first half of the year, PepsiCo acknowledged that persistent inflation and higher borrowing costs had put financial strain on households, leading to more subdued spending. While domestic sales have softened, growth in international markets has helped offset these challenges, along with a recovery from a Quaker product recall earlier this year. PepsiCo's stock has experienced a slight decline, closing at $168.53 on Thursday, down 0.8% since the start of the year.

PepsiCo's stock is currently trading at $167.21, with the RSI (Relative Strength Index) at a low, oversold level. If the earnings report exceeds expectations, this could be an opportune moment to initiate a position. Should the report come in stronger than anticipated, the $180 range represents a significant resistance level from previous highs. If the stock manages to break through this resistance, investors should keep an eye on the $184 and $192 price points as key levels to monitor going forward.