Evaluation and outlook
PepsiCo has taken steps to improve its product portfolio. That ensures the company’s revenue has been diversified within the food and beverage sectors. The company’s long list of brands, about 22 right now, appeals greatly to the taste of consumers, resulting in increased and sustained income. PepsiCo presently makes up to $1 billion per brand in sales per annum.
PepsiCo’s recently released quarterly financial results show a 12% increase in profits and a 4% increase in revenue, directly generated from sales. The company continues to gain advantage over its competitors in emerging markets such as China and India via its snack business, which helped it mitigate the 3% loss in sales revenue from its North American beverage section last quarter. According to analysts, PepsiCo will continue to increase its operating cash flow and productivity in 2013. For full 2013, the projected EPS will be close to $4.39, which is 3.80% higher than 2012, with revenue of $68 billion. On the other hand, Coca-Cola will have an EPS of $2.14 (1.90% higher than last year) for the full 2013, with revenue of $48.96 billion.
With regard to valuation, PepsiCo takes the lead over its rival, Coca-Cola, by 0.1. Though Coca-Cola is more affordable for investors, with regard to price per share compared to PepsiCo, Coca-Cola can’t match PepsiCo’s financial results quarter after quarter. On the scale of profitability, Coca-Cola holds the ace, as it is more profitable than PepsiCo. But, the ongoing share buyback initiative of PepsiCo shouldn’t be overlooked, as it has the inherent tendency to improve stock price appreciably in the foreseeable future, compared with Coca-Cola. In addition, PepsiCo’s dividend history is stronger, and its dividend yield of about 3.1% is higher, when compared with Coca-Cola. PepsiCo is a good dividend stock, which value investors love. At an annualized rate of 11% increase in dividend payouts for the past five years, PepsiCo is my choice and a stock I recommend for value investors to buy, possibly at its next dip.
The article Is PepsiCo Still A Great Stock To Buy Now? originally appeared on Fool.com and is written by Muhammad Bazil.
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