Investing in Pepsi Stock

Pepsi stock Earnings History:
Q1 2007: up 7.7%
Q2 2007: up 14.9%
Q3 2007: up 11.1%
Q4 2007: up 10.0%
Q1 2008: up 5.0% - inline with estimates
Q2 2008: up 10.5%
Pepsico next earnings report: Q3 2008
Last report: Pepsi's 2008 second quarter earnings beat analysts estimates at $1.02 by three cents. This was a strong beat given the rise in commodity input costs.

PepsiCo Inc (NYSE: PEP) is a global leader in beverages and snacks. Pepsi stock investors have a great food and beverage company that consists of Frito-Lay, Pepsico, and Quaker Brands, people see one of Pepsi’s holdings everyday (think: Gatorade, Tropicana, Aquafina, Mountain Dew). While Pepsi's main competitor Coca-Cola Co. (NYSE: KO) has outpaced Pepsi in 2007, Pepsi is the clear winner over the past five years. It beat its competitors to the snack food and un-carbonated beverages and this help pace the company and pad investor returns. It is this type of innovation and diversification that will help lead Pepsi stock deep into the 21st century. In fact, it is the Americas food division that now makes up some 45 percent of the company’s revenue.


Pepsi has a solid 2% dividend and expects to grow between 10-12% in 2008. It is relatively unaffected by economic downturns or fears of recession. The company’s significant growth led to Indra Nooyi announcing the separation into three divisions at the start of fiscal 2008. Pepsi is renowned for having a strong management team which is reflects in its strong Return on Equity numbers (some 35 percent better than Coca-Cola Co. at the time of writing). A $1,000 investment in Pepsi in 1980 would be worth $56464.72 today, not including dividends, which the company started paying in 1987.

2006 and 2007, however, brought in new faces to compete with PepsiCo Inc. Players like Jones Soda (NASDAQ: JSDA), Glaceau (Vitamin Water) and Hansen Natural (NASDAQ: HANS) – Monster Energy’s parent – have swept in to take market share from the two beverage titans. These burgeoning young companies have succeeded in generating both consumer and investor buzz. KO ended up paying a pretty penny ($4.1 billion) to acquire Glaceau. How Pepsi will compete with the young, hip beverage and snack companies will largely determine the increase in stock price for years to come. Will the company’s size stifle its innovative nature or will the management continue to make wise acquisitions and encourage a corporate entrepreneurial spirit?