NEW YORK (TheStreet) -- PepsiCo (PEP) - Get Report is looking to invest in other healthy segments outside of carbonated beverages and is reportedly in talks to invest in Greek yogurt maker Chobani, Reuters reports.
Along with the Purchase, NY-based company, rival TheCoca-Cola Co. (KO) is looking to invest in it as well.
TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio commented on PepsiCo saying:"All I care about with PEP is that its momentum in snacks and non-carb beverages continues. The organic growth is fabulous and CEO Indra Nooyi is doing a dynamite job."
The deal could value Chobani as much as $3 billion, CNBC.com noted.
This action comes as the yogurt company is searching for investors and considering the possibility of selling a minority stake so that it can grow its footprint and supply chain, Reuters noted.
This isn't PepsiCo's first time exploring into the dairy segment. In 2012, the company teamed up with German dairy company Theo Muller to sell yogurt through a joint venture.
Additionally, other companies besides the two soda giants are taking interest in Chobani.
PepsiCo shares closed Tuesday's trading session down 0.03% to $99.11.
Separately, TheStreet Ratings team rates PEPSICO INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate PEPSICO INC (PEP) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Beverages industry and the overall market, PEPSICO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for PEPSICO INC is rather high; currently it is at 58.09%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PEP's net profit margin of 3.26% significantly trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.4%. Since the same quarter one year prior, revenues slightly dropped by 5.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- PEPSICO INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, PEPSICO INC reported lower earnings of $4.27 versus $4.32 in the prior year. This year, the market expects an improvement in earnings ($4.56 versus $4.27).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: PEP