For the day ahead I’m looking out for earnings from PepsiCo, Corona beer-owner Constellation brands and H&M – as well as European and US manufacturing PMIs.
The gradual reopening of restaurants, hospitality businesses and on-the-go drinking should have helped PepsiCo in the last quarter but at the same time it snacks business is well positioned for work from home scenarios. Snacks now account for more than half of Pepsi’s revenue. So while revenue likely improved, perhaps by around 1%- profitability probably dropped due to higher costs in the supply chain to deal with the pandemic. EPS estimates are for $1.48 versus $1.56 a year ago. The stock has been bid into earnings, up 5% while year-to-date its higher by 1.4%.
The owner of Corona beer got unduly hit by volatile markets caused by the coronavirus in March and has since rallied over 100% off the lows. The beer-producer is not as exposed to the restaurant business as others but its portfolio is not quite on trend enough to see a big pickup in at-home drinking demand, meaning – like PepsiCo it’s a relatively defensive play.
H&M publishes its full quarterly report today after updating markets with a stronger than expected return to profit two weeks ago, which saw the share price rise double digits.
Final releases for manufacturing PMIs are released today and expected to confirm the flash reading showing expansion and monthly improvements seen in Europe and the US with some moderation in the UK.
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