Throughout the past several years, PepsiCo Inc. (PEP, Financial) has been growing at a healthy rate. In 2016, the company performed very well and the stock was up approximately 5%. Furthermore, the stock is off to a great start heading into 2017.
With each passing year, soda consumption has been declining at a considerable pace due to escalating health concerns. According to Bloomberg.com, per capita consumption of soft drinks reached its 30-year low in the United States in 2015.
PepsiCo is known for its flagship soft drink, Pepsi, as well as other carbonated drinks, but the company also controls other brands, such as Quaker, Gatorade and Frito-Lay, that further strengthen its product portfolio. Currently, its products are traded in more than 200 countries.
Unlike The Coca-Cola Co. (KO, Financial), PepsiCo made a smart move by diversifying its product portfolio away from soft drinks since consumers are gradually becoming more health conscious. In response to shifting consumer preferences, the company also introduced several new low-calorie drinks with 30% less sugar.
In addition, the company also showcased two new zero-calorie drinks, LIFEWTR and Pepsi Zero Sugar, during Super Bowl LI.Â
The global bottled water market is projected to grow at a compound annual growth rate of 8.3% from 2015 to 2020. Currently, a major portion of the bottled water market in the U.S. is governed by Pepsi’s Aquafina.
PepsiCo claims LIFEWTR will deliver a pure and refreshing taste, which could help the company capture additional market share worldwide.Â
As a result, the company’s belligerent focus on introducing innovative as well as healthy products will prove to be a key growth driver in the imminent years.
In its most recent quarterly report, the company reported EPS of $1.20, beating the analyst estimate by four cents. Revenue came in at $19.25 billion, again beating the consensus by $10 million. That figure represents a surge of 5% year over year.
After reporting negative revenue growth for the past eight quarters, the company finally managed to report positive growth in the fourth quarter. The company’s organic revenue surged 3.7%, a drop of 0.5% from the previous quarter.
Moving ahead, PepsiCo has an outstanding dividend growth history. The company has paid as well as increased dividends for 44 successive years, which is impressive.
Summing up
PepsiCo has rewarded shareholders with healthy returns for many years. It is highly likely it will continue to do so in the future as it is aggressively catering to health-conscious consumers with new low-calorie products.
On the other hand, PepsiCo also offers a healthy dividend yield of 2.75%. As an outcome, investors should continue to hold the stock for future gains.
Disclosure: No position in the stocks mentioned in this article.
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