This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Pepsi (PEP) vs. Coke (KO): Which Ruled 3Q?

NEW YORK (TheStreet) -- PepsiCo (PEP) reported third-quarter earnings before the bell on Wednesday, while Coca-Cola (KO) reported a day earlier -- how do the soda giants compare?

PepsiCo reported third-quarter net income of $1.91 billion, or $1.23 a share, compared to $1.9 billion, or $1.21 a share, in the year-ago quarter. Revenue came in at $16.91 billion, missing expectations by $120 million. The company noted a 1.5% revenue decline at its Americas Beverages unit, a result of a 4% drop in volume, though revenue increased 7% in its Americas Foods arm.

Despite sluggish growth in its beverages division, CEO Indra Nooyi remains confident in the company's full-year prospects.

"Our year-to-date results give us confidence in achieving our 2013 financial goals and we continue to believe that we have the right strategies in place to create long-term value for our shareholders," she said in a statement.

Coca-Cola, meanwhile, reported a 6% increase in net income to $2.45 billion, or 54 cents a share, compared to $2.31 billion, or 50 cents a share, a year earlier. Revenue came in at $12.03 billion, a 3% year-on-year decrease. Coca-Cola saw 2% growth in global volume in the third quarter and by region, 4% growth in Eurasia and Africa, 2% in North America and 5% in the Pacific.

CEO Muhtar Kent said the company delivered a record number of servings during the quarter for the Coca-Cola brand and across the entire portfolio.

"In all, we delivered 181 billion servings thanks to global volume growth of 2% driven by 2% global growth in brand Coca-Cola," he said in a conference call.

Both companies, however, expect to see continued sluggish growth in soda consumption. According to a Credit Suisse Research Institute report, as public awareness of its dangers increase, companies shilling high-sugar content products will suffer in the same way tobacco companies did.

"For companies with brands as strong as Coca-Cola or Pepsi, the biggest risk to sales growth and profitability is a negative public image," the report says.

Both Coca-Cola and Pepsi have introduced low-calorie and sugar-free options to diversify their beverage portfolio to hedge against the shift in consumer behavior.

During Coca-Cola's third-quarter conference call, for instance, Coca-Cola Americas President Steve Cahillane noted Coke Zero volume grew 5% in the quarter, while Diet Coke kept its spot as the second best-selling sparkling beverage in the U.S.

Nooyi said Pepsi is also focusing on the development and production of healthier beverage options.

"The diet slowdown has been a little more rapid than we expected," she said during a conference call. Due to PepsiCo's diverse brand portfolio, which includes snack companies Frito-Lay and Tropicana, Nooyi believes the company is well-insulated against any fundamental shifts in consumer behavior.

PepsiCo shares gained 2.1% to $82.27 and Coca-Cola was up 0.9% to $38 by market close. In the year to date, PepsiCo shares are up 20.2%, in line with the S&P 500's 20.7% gain, while Coca-Cola has climbed only 4.8%.

TheStreet Ratings team rates PepsiCo Inc as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate PepsiCo Inc (PEP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

TheStreet Ratings team rates Coca-Cola Co as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate Coca-Cola Co (KO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Written by Keris Alison Lahiff.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs