On Thursday, PepsiCo (NYSE: PEP) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

In the wake of strong earnings results from Coca-Cola (NYSE: KO), PepsiCo has something to prove. But the big question for the consumer giant is whether its snack business will boost its prospects above those of its more beverage-focused rival. Let's take an early look at what's been happening with PepsiCo over the past quarter and what we're likely to see in its quarterly report.

Stats on PepsiCo

 

 

Analyst EPS Estimate

$0.71

Change From Year-Ago EPS

2.9%

Revenue Estimate

$12.61 billion

Change From Year-Ago Revenue

1.5%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will PepsiCo win the soft-drink challenge this quarter?
Analysts have gotten just a tiny bit less optimistic in recent months about PepsiCo's earnings prospects, cutting both their first-quarter and full-year 2013 earnings estimates by $0.02 per share. But the stock hasn't missed a beat, rising nearly 15% since early January.

The big challenge that PepsiCo, Coke, and other beverage companies have faced lately is the threat of greater regulation due to health concerns from their products. Sugary drinks have been under siege in New York City and elsewhere, as a rising diabetes epidemic and other negative health consequences have likely contributed to weak beverage sales domestically. Energy drinks have faced even more extreme criticism as the FDA has looked into whether highly caffeinated beverages cause serious health risks.

In that light, PepsiCo's snack segment seems to be a better driver of potential future growth. With CEO Indra Nooyi having successfully positioned the company to be ahead of the curve with the trend toward healthier snacks and beverages, PepsiCo has tapped into what could become a much faster-growing market than traditional drinks and snack foods. As rumors have flown about the potential for the company to merge with Mondelez (NASDAQ: MDLZ) to create a snack supergiant, the importance of the food side of PepsiCo's business looks poised only to increase. The move would also help Mondelez broaden its offerings and potentially benefit the combined entity with an even stronger marketing image and brand awareness.

In PepsiCo's earnings report, watch closely to see if the company discusses its arrangements with its bottlers and its distribution network. With Coke's move to push more of its distribution process down to its bottling partners, Pepsi's beverage segment may see similar benefits from rearranging its bottling and distribution deals. Added to a strong snack unit, that could spell a big win for PepsiCo.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola. It recommends and owns shares of PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.