) reached a 52-week high of $76.33 on Monday, Feb 25, 2013
following solid fourth-quarter results announced earlier this
month. The closing price of the cola giant on Feb 25, 2013, was
$75.19, representing a solid one-year return of about 22.5% and
year-to-date return of about 8.5%. Average volume of shares
traded over the last three months stands at approximately
Solid Fourth Quarter Performance
PepsiCo reported impressive fourth-quarter results beating the
Zacks Consensus Estimate for both revenue and earnings. Moreover,
the company provided an impressive outlook for 2013, which was in
line with long-term targets and also increased its dividend
We believe that the earnings beat could be driven by
negligible currency headwinds and lower taxes in the quarter.
Though overall revenues declined due to an extra week in the
prior-year quarter and some structural changes, organic revenues
grew 5% driven by balanced growth in volume and price.
Impressive performance of the Americas Foods business,
especially the Latin America segment boosted sales growth in the
quarter. The American foods business gained from successful
innovations and increased brand building investments.
Overall, we are encouraged by the company's strong brand
portfolio, its product and geographic diversity and solid cash
flow generation. Moreover, PepsiCo has encouraging plans to
reinvest excess earnings to support brand building, innovation
and improve productivity, especially in the U.S.'
Valuation is Decent
PepsiCo currently trades at a forward price-to-equity (P/E) of
17.09x, a slight discount to the peer group average of 17.35x. On
a price-to-sales and price-to-book basis, the stock is trading at
a premium to the peer group average. However, on a return on
equity (ROE) basis, the stock looks attractive. The stock has a
trailing12-month ROE of 29.2%, which is above its peer group
average of 18.5%.
PepsiCo carries a Zacks Rank #2 (Buy). Unlike strong results
by PepsiCo, rival,
The Coca-Cola Company
) reported mixed fourth quarter results; beating on earnings and
lagging on sales. Yesterday, another beverage company,
Dr Pepper Snapple
) announced dismal fourth quarter results, missing Zacks'
expectations for both revenue and earnings.
You may consider investing in one of Coca-Cola's bottling
Coca-Cola Hellenic Bottling Company S.A
), which carries a Zacks Rank #2 (Buy).
COCA COLA HELNC (CCH): Free Stock Analysis
DR PEPPER SNAPL (DPS): Free Stock Analysis
COCA COLA CO (KO): Free Stock Analysis Report
PEPSICO INC (PEP): Free Stock Analysis Report
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