Pepsi Goes Digital With Touchscreen Soda Fountain


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PepsiCo ( PEP ) is going digital. The soft-drink maker is rolling out a high-tech soda fountain that will allow customers to come up with a thousand combinations of drinks to slake their thirst.

"Have you ever dreamed of a raspberry lemon Mountain Dew?" asked the May 15 press release announcing Pepsi Spire, its new beverage dispenser.

CEO Indra Nooyi said Pepsi had heard from restaurant operators that previous fountains were too slow, expensive and required too much worker training. So Spire, which resembles a big iPhone with a touchscreen, seeks to fix that.

The portfolio of three versions of Spire was shown off last week at the National Restaurant Association Show in Chicago. The move indicates that Pepsi might be trying to play digital leapfrog with rivalCoca-Cola ( KO ), which in 2009 launched Coke Freestyle.

PepsiCo sells not only soft drinks but also Frito-Lay snacks, Gatorade, Quaker Oats and Tropicana fruit juice.

Pepsi stock is very near an all-time high. In the company's most recent quarterly earnings report, EPS was up 8%, although analysts are forecasting a 6% decline in the next report. Sales have been running generally flat the past several quarters.

But the company's return on equity is a healthy 29% and pretax margins are running at a 14% clip.

The company's Earnings Stability Factor is 3 on a 0 to 99 scale where low numbers correspond to steady growth.

Pepsi is in the packaged foods industry group, which stands at No. 82 out of 197 as of last week. Four stocks trading at least 12 a share score an RS Rating of 80 or higher, a good sign. Pepsi's RS is mediocre, at 64.

Pepsi pays a quarterly dividend of 65.5 cents a share, which works out to a 3% dividend yield. The dividend was declared May 6 and will be paid June 30 to shareholders of record June 6.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Investing Ideas
Referenced Stocks: PEP , KO

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