Earnings Faceoff: Coca-Cola vs. Pepsico

What better way to kick off earnings season than by pitting the world's biggest soda rivals, Coca-Cola (NYSE: KO  ) and Pepsico (NYSE: PEP  ) , against each other? Both companies are reporting earnings this week. Shares of Coke and Pepsi are up more than 4% and 10%, respectively, so far this year. The question now is: Which of these companies will offer the most enticing quarterly results when it reports this week? With Coke's results already on the table, let's look at how the pop giant performed relative to Wall Street's estimates and what it could mean for Pepsi's results when it reports earnings tomorrow.

Coca-Cola fizzles
Coke released second-quarter earnings before the market opened today, and it failed to impress. Analysts were looking for earnings to be flat at $0.63 per share, which was the same profit the company reported a year ago. Unfortunately, Coke delivered earnings per share of just $0.58 in the period. Coca-Cola's second-quarter revenue wasn't much better. Coke's revenue declined more than 1% to $12.5 billion in the quarter. For comparison, the Street was looking for revenue of $12.8 billion. Therefore, Coke missed the mark on already relatively low expectations.

This dismal report was primarily due to slowing sales of carbonated soft drinks in North America -- a problem that could also weigh on rival Pepsi when it reports tomorrow.

One bright spot in Coca-Cola's earnings was the 3% growth in its global beverage volumes in the quarter, along with a 2% bump in worldwide sparkling beverage volume. This compares to international sales volume growth of 2% in the previous period, compared to flat sales volume in North America during that time. Coke said the volume growth was driven by the company's sponsorship of the FIFA World Cup, and the global launch of its "Share a Coke" marketing campaign.

This was the first quarter in the past year that Coke has missed analysts' estimates. The king of pop has delivered earnings in line with estimates in the past four consecutive quarters. Let's see how Pepsi stacks up in this regard and what we can expect from Pepsi when it reports on Wednesday.

What to expect from Pepsico
Unlike Coca-Cola, PepsiCo has beaten analysts' estimates in all four of the past consecutive quarters. Of course, as Foolish investors we know better than to anchor our hopes on past performance. Let's dig deeper to see what the Street is expecting from Pepsi when it reports second-quarter results on Wednesday.

Wall Street is looking for profit to decline $0.08 from the year-ago period to $1.23 per share in the quarter, down from $1.31 in fiscal 2013. Analysts are also less than optimistic about Pepsi's ability to generate revenue growth in the quarter. For the second quarter, the Street is looking for revenue of $16.7 billion, down slightly from $16.8 billion a year ago.

Pepsi will likely suffer from declining soft drink sales in the U.S. market, as happened with Coke's domestic business in the recent period. However, sales from Pepsi's all-star portfolio of billion-dollar snack food brands should help offset some of this weakness. Moreover, with more than half of Pepsi's total revenue coming from its snacks business today, Pepsi has a competitive edge over Coke.

Moreover, Pepsi's growing snack segment is partially to thank for the stock's performance over the past year. The company's stock has outpaced rival Coke, climbing more than 10% year to date to trade around $89.94 a share, compared to a 4% gain in shares of Coca-Cola. While both companies are solid long-term bets, I believe Pepsi's diverse mix of brands puts it in a better position than Coke ahead of this week's earnings.

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