PepsiCo (NYSE:PEP) Chairwoman and CEO Indra Nooyi has strategically positioned the company to benefit from the growing trend in consumers switching to healthier foods. PepsiCo's line of "Good For You" products contains fruits, vegetables, whole grains, low-fat dairy, nuts, seeds, and reduced sodium, sugar, and saturated fat contents. Its line of "Fun For You" products contains its traditional sodas and snacks such as Pepsi, Mountain Dew, Doritos, and Lay's potato chips. PepsiCo's diversified business model gives it an edge over its competitors The Coca-Cola Company (NYSE:KO) and Mondelez International (NASDAQ:MDLZ).

PepsiCo's Strategy vs. Its Competitors
Coca-Cola's fortunes are tied more directly to the beverage business than PepsiCo's, as its product portfolio is comprised of sodas, juices, and sports drinks such as Coca-Cola, Minute Maid, and Vitamin Water. Mondelez relies heavily on a snack portfolio that would be categorized as "Fun For You" under PepsiCo's model; Mondelez's brands include Oreo, Cadbury, Chips Ahoy!, and Nabisco. Coca-Cola's and Modelez's businesses are strong in their own right but they are not diversified like PepsiCo and are not fully positioned to benefit from the switch to healthy foods. PepsiCo's pivot to healthier alternatives has produced brands such as Sabra, its line of hummus products that is growing tremendously. The market for hummus is expanding due to its nutritious content and PepsiCo is uniquely positioned to benefit from this trend. In addition to its healthier products, PepsiCo's brands include Lay's, Gatorade, Lipton, Tostitos, as well as Fritos. All of these brands generate over a billion dollars a year in sales.

Pepsi Good For You Brands

Source: http://www.pepsico.com/Brands

PepsiCo's strategy is laid out by Nooyi in her remarks from the first quarter results:

We continue to perform well, in part, because we have strong, balanced portfolios of brands, products and geographies that enable us to capture growth opportunities across multiple demand spaces while we responsibly manage through the volatility and challenges in other parts of the business.

Speaking on CNBC's Squawk Box, the company's CFO, Hugh Johnston, commented that peanut butter and jelly are purchased together around 20% of the time while snacks and beverages – PepsiCo's business – are purchased together around 50% of the time. This speaks volumes to the strength of the company's combined business model and the value provided by selling snacks along with beverages. When you eat Doritos, chances are good you're drinking a Pepsi or Mountain Dew; when you're having Quaker Oats oatmeal, you're probably drinking Tropicana orange juice. PepsiCo has a multitude of products that interact and brands that resonate with consumers. This directly contradicts hedge fund manager Nelson Peltz's calls for PepsiCo to split into separate beverage and snacks businesses. PepsiCo's positive first quarter should quell some of the calls for PepsiCo to break up and alleviate some of the pressure on the company's management.

PepsiCo's Most Recent Financial Results
PepsiCo turned in a great first quarter with beats on earnings and revenue. The company reported first quarter core EPS of $0.83, $0.08 above Wall Street estimates and 7% above last year's first quarter. The company's EPS on a GAAP basis increased 15% from $0.69 to $0.79. Its net revenue was relatively flat compared to last year's quarter but its organic revenue grew 4%. The flat net revenue was a result of substantial foreign exchange translations and structural changes in the company's operating activities. PepsiCo also announced to the delight of shareholders that the company expects to return around $8.7 billion to shareholders through dividends and stock repurchases in 2014, representing a 35% increase from 2013.

Coca-Cola's earnings met while its revenues slightly beat Wall Street estimates in its first quarter. However, its EPS fell 6% from the previous year's first quarter and its revenue fell 4% on a comparable basis. Like PepsiCo, Coca-Cola will repurchase stock in 2014 at an amount  between $2.5 to $3.0 billion in addition to its increased dividend. Mondelez will report its 2014 first quarter results in May, but the company's revenue increased 0.8% in 2013 while its EPS increased 28.1%. The disparity in the increases was largely a result of Mondelez aggressively repurchasing its stock in 2013 like PepsiCo and Coca-Cola. Mondelez initiated a $7.7 billion share repurchase program in 2013, using $2.7 billion of it in the fiscal year.

PepsiCo's Financial Position
Like Coca-Cola and Mondelez, PepsiCo is financially sound and returns capital to shareholders through dividends and stock repurchases. PepsiCo has increased its dividend every year for the past ten years and continues to aggressively buy back its shares. The company will continue to yield solid returns in the future through strong cash flows from its operations and after its investing and financing activities; cash flow from operations was $9.688 billion and free cash flow was $6.893 billion in 2013, both all-time highs. A chart showing PepsiCo's cash flow from operations and free cash flow over the last ten years can be viewed below.

PEP Cash from Operations (Annual) Chart

PEP Cash from Operations (Annual) data by YCharts

PepsiCo continues to generate strong returns on equity and capital with 28.79% and 11.53%, respectively, in 2013. PepsiCo's management and board collectively hold over $200 million worth of the company's stock and are well-incentivized to steer PepsiCo in the right direction. The company's financial position gives it the flexibility to pursue opportunities in other markets, such as its purchase of Wimm-Bill-Dann Foods in Russia, and to research and acquire healthier snack and beverage alternatives.

A Company With an Eye on Efficiency
PepsiCo also announced in its first quarter report that it expects to realize about $1 billion in productivity savings in 2014. This follows from the company receiving the 2014 Environmental Protection Agency's ENERGY STAR Partner of the Year-Sustained Excellence Award for the ninth consecutive year. The accolade recognizes companies for their leadership in protecting the environment through superior energy efficiency programs. This shows that PepsiCo is an extremely efficient company that not only strives to grow revenue but also attacks the inefficiencies in its productions processes, leading to greater returns for both shareholders and the environment. In conjunction with its leading brands and financial position, PepsiCo will continue to prosper well into the future.

Andrew Sebastian has no position in any stocks mentioned. The Motley Fool recommends PepsiCo. The Motley Fool 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.