After Coca-Cola (NYSE: KO) delivered an earnings report that fired investors up earlier in the week, PepsiCo (NYSE: PEP) was unable to follow suit.

Core earnings per share for the quarter came in at $1.05 versus $1.04 expected by analysts. Revenue also topped estimates, growing to $18.2 billion versus Wall Street's expected $17.6 billion. But in a market where it's not about "what have you done for me lately" but "what will you do for me tomorrow," the company's 2011 guidance popped the fourth-quarter party balloons.

For any investor who's been following along with the rest of the earnings reports from consumer goods and food companies, it will be no surprise that PepsiCo sited commodity costs as a problem. We heard the same from Coke, we heard it from Procter & Gamble (NYSE: PG) and Sara Lee (NYSE: SLE), and we heard it from McDonald's (NYSE: MCD). With prices for commodities like grain, oil, and metals rising, a whole swath of goods is suddenly becoming more expensive to produce.

At PepsiCo, though, the impact seems to have been much more pronounced -- particularly when compared to Coke, which doesn't have a food and snacks arm. Commodity prices were a primary reason the company gave for slicing its growth outlook for 2011 from low double digits to 7% to 8%. Management also expressed concern that cost pressures would persist and said that longer-term profit growth would be in the high single digits.

Interestingly, investors gravitate toward companies such as PepsiCo -- or P&G and Coke for that matter -- precisely because they have pricing power and can better handle rising costs. However, this hasn't exactly been the case lately. For P&G and other consumer goods companies, the threat from private-label goods from the likes of Target (NYSE: TGT) and Kroger (NYSE: KR) make raising prices a dicey proposition. For the broader group, including PepsiCo, the continued weakness in the economy simply makes it easier to scare off customers with higher prices.

Still a buy?
Earlier this year, I called PepsiCo one of my top picks in the consumer sector for 2011. Admittedly, management's outlook gives me pause. However, as she was being grilled by analysts on the conference call, CEO Indra Nooyi quipped, "We look at our company and say, boy, if you could find other companies like ours, you should go ahead and invest in them." Particularly with shares trading at just 15 times 2010 core earnings, it's a point that's hard to argue, even with the lowered growth forecast.

I also like some of the moves that the company has been making lately. It paid a hefty price for a majority stake in Wimm-Bill-Dann, but the newly expanded footprint in Russia seems like a big positive. The buy also dovetails nicely with the company's increased focus on nutritious products -- or at least the appearance of more nutritional products -- which is a strategy I think is on the right track.

I'm definitely disappointed with what came to light in this report, but, for now at least, I'm still with Nooyi and am a fan of PepsiCo as an investment.

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