• As earnings season begins, CNBC's Jim Cramer offered insight on how to consider stock movements before a report.
• He used PepsiCo as an example, saying Wall Street expected weak sales figures, so the stock didn't get hit badly when it reported an earnings miss.
• "This is something you need to keep in mind as we head into earnings season: If a stock has already sold off hard going into the quarter, it's very difficult for it to keep going down unless the numbers are shockingly horrible," he said.

CNBC's Jim Cramer said Wednesday that as earnings season begins, it's wise to keep in mind that sometimes bad news is baked into a stock's price before the report.

Cramer pointed to Wall Street's reaction to PepsiCo in the lead-up to, and wake of, its Tuesday report. He noted how shares dipped but managed to recover even though the company posted a revenue miss.

"This is something you need to keep in mind as we head into earnings season: If a stock has already sold off hard going into the quarter, it's very difficult for it to keep going down unless the numbers are shockingly horrible," he said. "Nothing shocking about PepsiCo."

Cramer pointed out that PepsiCo was hit with "an avalanche of negative research" going into the quarter, with analysts from Morgan Stanley, Citi, Bank of America, RBC Capital and Barclays expressing their concerns, with some worried about weak sales.

While the snack and beverage maker did miss on revenue, it managed to beat earnings expectations. The company lowered its full-year outlook for organic revenue, citing weak demand in North America as shoppers buy fewer snacks. PepsiCo also reported shrinking volumes abroad and felt the repercussions of a recall of its Quaker Oats products.

Although the stock notched losses in the days leading up to the report, it crept back up in the aftermath and finished Tuesday's session up 1.92%, according to FactSet. Cramer found several bright spots in the quarter he said were meaningful, including the company's emphasis on providing better value for items like potato chips and efforts to broaden its portfolio to include healthier options.

"Stocks react to expectations, and when it comes to PepsiCo, everyone expected a real bad quarter, which is why the stock sold off so hard going into the report," Cramer said. "But once we saw the numbers and heard the commentary, it was bad with ... a few bright spots, which allowed PepsiCo to rally anyway very nicely."

PepsiCo did not immediately respond to a request for comment.

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