Pepsi's Salty Sweet Q3

Pepsi (NYSE: PEP  ) did it again this morning, posting solid quarterly results driven by tasty new snacks and drinks. The world's second-largest soft-drink company, and parent of Frito Lay, continues executing on its formula for getting strong performance out of what might look, at first glance, like a stodgy old firm.

In the third period, ended Sept. 6, Pepsi's total revenues grew 8.4% to $6.3 billion. Net income increased 13% to $1.08 billion, and earnings per share jumped nearly 17% to $0.62. Three percentage points of that EPS gain came from cost benefits associated with Pepsi's 2001 Quaker Oats acquisition. Total volume was up an impressive 5%.

The North American divisions of both Frito Lay and Pepsi performed well during the quarter. Frito Lay's sales were up 7%, with volume up 4%. The introduction of new variations on old products, like its Twisted Cheetos, helped keep offerings fresh for consumers. Frito Lay is also directly taking on Procter & Gamble's (NYSE: PG  ) Pringles brand potato chips with the just-launched Lay's Stax Potato Crisps. If a hit, they could help boost fourth-quarter results.

On the beverage side of things, Pepsi wasn't slowing down, either. Mountain Dew Live-Wire, an orange version of the caffeinated fave, was a summer success, and Sierra Mist continues to quench the thirst of many a soft-drink lover. Both contributed to an increase in revenues of 6% and in volume of 3%.

And let's not forget about Pepsi Vanilla, which was introduced in August to compete against Coca-Cola's (NYSE: KO  ) Vanilla Coke. A huge marketing push has supported the drink, including the sponsorship of the National Football League's opening game. So far, Pepsi Vanilla appears to be popular. By the end of the year, we should have a better feel for just how well it's doing.

Looking ahead, Pepsi anticipates its success will continue and hopes to earn $2.19, including two cents of merger costs, for the full year. That's at the top end of the company's previous guidance.

Given that Pepsi Vanilla has yet to reach its full stride, and that other new products are hitting the shelves (and customers' mouths) now, it's not hard to see why Pepsi is optimistic. Investors apparently are, too. Shares of Pepsi are nearing new highs, and trading at a forward price-to-earnings multiple of around 21.