5 Things You May Not Know About PepsiCo

It's important to do your research before making an investment. It's easy to go in making assumptions that may not hold any truth. With that said, a look at the latest form 10-K and proxy of snack and beverage giant PepsiCo (NYSE: PEP  ) yielded five interesting things that may challenge your assumptions about the company.

1. PepsiCo beats rivals in the U.S. liquid refreshment category.
You may assume that beverage giant Coca-Cola (NYSE: KO  ) holds the No. 1 spot in terms of retail sales in the U.S. liquid refreshment category, but according to a chart in PepsiCo's form 10-K, that's not the case. Rival Dr Pepper Snapple Group (NYSE: DPS  ) comes in at a distant No. 4 with 9% of U.S. retail sales. Coca-Cola actually holds the No. 3 spot with 21.4% of U.S. retail sales. PepsiCo holds the No. 2 spot with 24.4% of U.S. retail sales. The No. 1 spot belongs to a catchall "other" category.

2. It's also the king of salty snacks.
PepsiCo holds the No. 1 position in the U.S. savory snacks category, defined by a variety of snacks such as potato chips and crackers that make up 36.4% of U.S. retail sales. The company actually commands a strong presence in both snacks and beverages. This means when you pick up a bag of potato chips or crackers, it most likely originated with PepsiCo or one of its affiliates. 

3. Its CEO is a strategy expert.
PepsiCo's CEO, Indra Nooyi, has extensive experience in corporate strategy. According to the company's latest proxy, she has held various executive roles there, such as "Vice President of Corporate Strategy and Development" and "Senior Vice President, Strategic Planning," and prior to joining PepsiCo she served as Vice President and Director of Corporate Strategy and Planning at Motorola. PepsiCo needs a global executive with a strategic mind-set to navigate consumer behavior changes in the beverage business and to navigate the expansion of its snack business in conjunction with its overall strategy. 

4. It distributes competitor's products.
Like Coca-Cola, Pepsi operates under license to distribute the products of rival Dr Pepper Snapple Group. In a restaurant soda dispenser you may see a Dr Pepper or Orange Crush dispenser along with Pepsi or Coca-Cola products. Apparently, Dr Pepper makes up for distribution deficiencies by making deals with larger beverage companies. 

5. It's closing its Iranian office.
Interestingly, PepsiCo, through a foreign subsidiary, maintained a small three-employee presence in Iran, where the company provided "sales support to independent bottlers in connection with in-country sales of foreign-owned beverage brands." PepsiCo is currently in the process of closing this sales office. It disclosed this fact due to the requirements under the "Iran Threat Reduction and Syria Human Rights Act of 2012." While the transactions aren't significant enough to move the overall needle of the company's financials one way or another, finding this fact represents a good example of why you should research an investment prospect. Understanding the businesses you own is crucial.

Foolish takeaway
A broad and diverse product portfolio will serve PepsiCo and its shareholders well over the long term. PepsiCo can lean on snacks, non-sparkling beverages, and the strategic acumen of its CEO to move the company forward in the face of declining demand for carbonated beverages. Right now PepsiCo's shares trade at around 19 times earnings, which means it's fairly valued. Investors can await a correction or buy now to enjoy a 2.7% dividend yield while waiting for the stock price to rise.

Looking for more great dividend yields?
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2696857, ~/Articles/ArticleHandler.aspx, 8/29/2014 6:11:47 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement