PepsiCo (NASDAQ:PEP) stock trailed the market in 2019, but its 24% increase outpaced many packaged-food peers. That return also beat Coca-Cola's (NYSE:KO) as investors celebrated gains in its snack portfolio that offset sluggishness in the beverage division.

On Thursday, those shareholder judgments will be put to the test when Pepsi announces its fourth-quarter results and issues its outlook for fiscal 2020. Let's look at a few things investors will be watching.

Two glasses of cola sit on a table

Image source: Getty Images.

Two divisions

Pepsi's growth through the first nine months of 2019 was a mixed bag. On the one hand, its beverage segment lost ground to Coca-Cola, with organic volume falling and overall growth landing at around 3% compared with 5% for the soda titan. The good news is that Pepsi's snack segment was picking up that slack, with sales gains speeding up to 5.5% in Q3 from 5% in the prior quarter.

Those successes put the company in a position to edge past its original full-year goal of 4% growth. But hitting that metric might not be enough for investors this week.

After all, Coke just notched its fastest expansion pace in over a decade. If some of those gains came at Pepsi's expense, then its beverage business rebound might take even longer than expected. At the same time, investors will be watching for continued strength in the Frito-Lay snack foods division to potentially accelerate growth.

Profit wins

Pepsi has been telling investors to brace for higher expense spending in the back half of the year, and that was certainly the case in the third quarter as the company invested more in advertising, in fixing bottlenecks in the supply chain, and in manufacturing efficiency. These initiatives pushed operating profit down in the Quaker Foods segment and in the wider beverage division. They'll likely push annual earnings lower by about 1%.

Expect similar modest expense pressures in the fourth quarter. But shareholders will be looking for signs that this spending pace is slowing into 2020, and for evidence that it is paying off in terms of faster growth and stronger profitability.

Looking ahead

Citing strong global consumer spending, Coke in late January predicted that growth will remain strong in 2020 as organic sales rise by roughly 5%. The beverage giant also said it should return to robust earnings growth thanks to the continued shift toward high-margin products and lower pressure from foreign exchange rates.

That outlook sets the bar high for Pepsi to show a similar level of bullishness as CEO Ramon Laguarta and his team survey the competitive landscape into 2020. The company might take the conservative route and predict a growth slowdown, paired with increasing profits and surging cash returns. On the other hand, if demand picked up during the holiday season as it did for Coca-Cola, Pepsi might issue an outlook that implies a shrinking gap between the two consumer staples giants.