Pepsi Is Still a Better Investment Than Coca-ColaPEP) is a much better investment than The Coca-Cola Co (KO). Although Pepsi's stock has been almost flat this year, the business is performing really well.
The soda industry is in transitionPepsi, in the most recent quarter, posted earnings per share of $1.40, $0.08 greater than consensus estimates.
Despite the beat, Pepsi’s revenue was actually down 1.8% year-over-year.
Nowadays, consumers are moving away from sugary soft drinks. And due to this trend, the companies in the soda industry are facing problems due to the declining demand for soft drinks.
According to a forecast from IBISWorld,a global business intelligence consultancy, per capita soft drink consumption is projected to fall to 36 gallons in 2018 from 46.5 gallons in 2004.
However, Pepsi is putting in a lot of efforts to safeguard itself from the declining consumption of soda.
For example, it boasts a diversified portfolio of snacks, a major help in mitigating any hostile developments in the beverage industry, like bans or taxation.
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Apart from this, the company publicized that it will partner with Twitter in a new marketing campaign grounded on Twitter Inc's (TWTR) recently launched a promoted “Stickers” concept. Major social media campaigns such as this have shown to be gaining traction.
Pepsi expects the advertising campaign will produce higher returns on capital compared to prior marketing rollouts.
The company’s ability to adapt the varying trends with time proves ability to survive shifts in customer demand. With impressive returns on capital, a multi-year growth plan, and continued dividend growth, Pepsi is a better option compared to the rivals in the beverage space like Coca-Cola.
A wise pick in a volatile marketPepsi’s ability to sustain its business through changing trends makes it a much better investment than Coca-Cola in my opinion. The company’s limited volatilityis a huge positive for long-term investors and its ability to survive a downtrend is very impressive.
Although the stock has been almost flat in 2016, I think defensive, long-term investors should consider adding it to their portfolios for its safety and dividend yield of 2.8%.
Published on Oct 7, 2016By Akshansh Gandhi