Soft drink and snack (and oatmeal) giant PepsiCo (NYSE:PEP) is expected to grow earnings by 10.8% in calendar year 2005, and the company's off to a great start. Net income increased 13% in the first quarter and beat analyst expectations. That's sweet!

Helping net income was a $28 million pre-tax gain on the sales of shares in Pepsi Bottling Group (NYSE:PBG), a 2% foreign currency gain in its Pepsi International group, and a 50-basis-point reduction in the effective tax rate. Strip out these extraordinary events to get a number that gives a fairer comparison with the year-ago quarter, and we're looking at net income increases of 7% year over year -- pretty well-aligned with revenue increases. Most importantly, earnings guidance for the calendar year was increased a penny to $2.56 a share. That prices the stock at 21.4 times forward earnings.

To its merit, the company has experienced balanced earnings growth in virtually every division. For example, while Tropicana's chilled-juice volume declined by 2% in North America, double-digit growth in Gatorade, Aquafina, and Propel products contributed to overall volume increases of 4%. Also significant among operating trends was that the company reported strong international growth, as Russia, China, India, and other emerging markets bolstered snack-food sales -- a favorable and likely sustainable trend given continuing market integration and economic growth in those regions.

A quick look at adjusted numbers indicates stable growth in Pepsi's core business, though not quite the blockbuster that a quick glance at numbers would have you believe. As full-year prospects go, Pepsi has product innovations such as Pepsi Lime and Diet Pepsi Lime -- and a reformulated Pepsi One -- headed for store shelves. There will be the new Dole Lights line of 50% juice drinks. And there will be a full year's revenue from MovieNachos, a Frito-Lay-branded movie snack being sold at AMC Theatres (AMEX:AEN) in the U.S.

Analysts expect the company to earn $2.85 a share in 2006 -- a similar multiple to Coca-Cola (NYSE:KO) that prices the stock at 19.3 times forward earnings. Provided its product launches are successful, Pepsi should meet its targets with relative ease. Coke captured a substantial market share with the launch of its Diet Coke With Lime; Pepsi hopes to do the same with its own launch. But for a company expected to grow earnings 10% a year, is it worth it?

Fool contributor W.D. Crotty owns shares in PepsiCo. Click here to see The Motley Fool's disclosure policy.