PepsiCo (PEP 1.05%) has satisfied consumers' bellies for more than a century. But recently, the company has left shareholders craving more. With increased competition and loss of market share, many investors wonder if this global snack food and beverage giant is simply fizzling out. Are more bland results ahead for PepsiCo?
Below is an excerpt from our brand-new premium research report, which lists the three biggest risks facing PepsiCo. It's just a taste of one section, but we hope you find it useful.
Risks
1. Increased focus on negative health effects of soft drinks and unhealthy foods.
The risk to PepsiCo is that persistent and continued emphasis on these effects may curtail soda and snack-food consumption. Soda makers are banding together to proactively tackle the issue. In selected cities next year, they will roll out vending machines that'll not only display the number of calories in a container of soda, but also suggest a lower-calorie beverage option. Fast-food operators have mostly borne the brunt of the backlash against unhealthy foods, but PepsiCo could feel more pressure regarding its salty snacks in the future.
2. Increased regulatory scrutiny or legislation.
A proposed soda tax aimed at curbing obesity could put increased pressure on PepsiCo.
3. Restructuring and acquisition costs.
PepsiCo's credit rating was lowered due to the debt it took on to fund bottler acquisitions. The acquisitions and restructuring costs will pressure bottom-line growth in the short term and have the potential to lower return on investment and increase commodity cost pressures.
