PepsiCo (NYSE:PEP) has been an outstanding performer for the past decade. It put some sweet kung-fu moves on competitor Coca-Cola (NYSE:KO) by shifting the game away from soft drinks to snack foods, where Pepsi now reigns supreme. While the company may be pressured now due to the rising prices of product inputs such as oil and sugar, barring a major misstep, its long-term story is intact. Let's see what's bubbling in the current quarter.
What analysts say:
- Buy, sell, or waffle? Thirteen analysts cover this premier name in the consumer-goods sector, with 12 buys opposing one lonely hold.
- Revenues: Analysts expect sales growth of 8%, to $8.3 billion.
- Earnings: Wall Street's calling for 10% earnings growth, to $0.77 per share.
What management says:
For quite some time now, the name of Pepsi's game has not been soda, but chips, sports drinks, coffee drinks, water, and energy drinks, to name a few. Pepsi has leading stakes in each market, with a hefty lead on Coke in all of them. However, Pepsi CEO Steve Reinemund is not resting on his laurels; he's shifting the company toward healthy snacks and drinks as well. The company has been pushing its Smart Spot initiative for years, adding a green stamp to the packaging of products that meet U.S. FDA regulations for healthfulness (such as Dole juices or Baked Lay's potato crisps). Reinemund sees the company eventually balancing health and wellness with good old-fashioned snacking indulgence.
What management does:
Want some far-reaching vision? Thanks to Coke's bungling, Pepsi was able to grab Quaker Oats and its all-too valuable Gatorade brand. In the same year, Pepsi also acquired Sobe, and several years later it forged a hugely successful partnership with Motley Fool Stock Advisor pick Starbucks (Nasdaq: SBUX) to sell Frappuccinos. Sales and net income for the company have been growing at a respective 7% and 10% annually over the last five years, and Pepsi's five-year average return on invested capital is a solid 24%. Any company would be pleased to post such healthy numbers. In a nutshell, the company has performed well, despite the strain of high oil prices and reduced consumer spending.
One Fool says:
Pepsi has been very good to shareholders, and the market has priced these shares efficiently. At a P/E of about 25, and an enterprise value-to-operating cash flow ratio of roughly 20, there is little value left in Pepsi shares. However, this is a great company, and great companies are rarely on sale. For more in-depth coverage on Pepsi, check out tomorrow's earnings roundup by fellow Fool Nate Parmelee.
Related Companies:
- Cadbury (NYSE:CSG)
- Kraft Foods (NYSE:KFT)
- Hershey (NYSE:HSY)
- Hansen Naturals (NASDAQ:HANS)
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Fool contributor Stephen Ellis does not own shares in any companies named above. You can view his holdings here . Kraft is a Motley Fool Income Investor pick. The Motley Fool has a caffeine-free disclosure policy .
