Global beverage and snack food giant PepsiCo (NYSE:PEP) offers a good lesson as to why many investors believe that valuation always matters. PepsiCo was, and is, a fine company, but the valuation has been a little too fizzy for some time. The net result? A stock that has significantly lagged the market and its large rival Coca-Cola (NYSE:KO) over the past couple of years. Now with global commodity pressure and a strained consumer, Pepsico seems to be running a little flat.
Second Quarter Results Lacking Some Quality
It is hard to get especially enthusiastic about second quarter results at PepsiCo. While reported revenue did indeed climb nearly 14%, organic revenue growth was a little less than 5% (the company uses its own different metric for organic growth and reported 8% growth by its methodology). Growth was definitively led by the international operations, as PepsiCo Americas Foods posted 7% organic growth, while Americas Beverages was basically flat. Volume was likewise iffy - total snack food volume was up about 10%, while beverages rose about 1%.
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PepsiCo Leaves A Funny Aftertaste (PEP, KO, K, KFT, GIS, UL, NSRGY.PK)