Filed under: Earnings reports, Products and services, Consumer experience, Coca-Cola (KO), PepsiCo (PEP)
PepsiCo (NYSE: PEP) reported Q4 and full-year earnings today, and the Street liked what it saw. Personally, I’m a fan of Coca-Cola (NYSE: KO), mainly because I own the stock — well, that’s pretty much the only reason, since I actually prefer Pepsi’s soda over Coke’s (although I do like Diet Coke best of all). As of this writing, it’s up about 5%.
Net revenue grew 17% for the fourth quarter and 12% for all of 2007. That’s great double-digit growth, but the bottom line actually declined 29% in the fourth quarter and rose a flat 2% for the full year. That was on a GAAP basis. Excluding various items, net income actually grew 8% in Q4 and 13% in 2007. Full-year operating cash flow jumped 14%, and it was more than enough to cover capital spending and the blue-chip dividend (the latter of which is a key reason why investors put this stock on buy, hold, reinvest, and forget!).
Snack volume — remember, Pepsi owns the tasty Frito-Lay portfolio and the Quaker brand — grew 6%, while beverage volume expanded by 4%. Pepsi expects higher operating cash flow for fiscal 2008 — $7.6 billion versus the $6.9 billion generated in 2007 — and it is planning to continue share repurchases. Yes, I suppose I’d rather you buy shares in Coke since I own them, but truth be told, investors will probably do well owning either beverage company (I do concede that I envy the Frito-Lay asset).
Disclosure: Steven Mallas owns shares in Coke, and might buy more at any time.
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