TheStreet.com sums it up quite nicely:
Unlike Coca-Cola (KO), which has just recently realized that manufacturing carbonated soft drinks (CSDs) is a declining business, Pepsi has successfully diversified away from CSDs into snacks, such as Frito Lay, and other faster-growing beverage categories such as bottled water and sports drinks. The difference in financial results has been staggering. Over the last five years, Coca-Cola has managed to eke out an average annual earnings-growth rate of just over 5%. Pepsi, meanwhile, has grown earnings at a relatively blistering pace of over 12%....
On today's call, we'll be looking for Pepsi to give us some color on the energy drink boom and what ramifications it has had on Pepsi's soda segment. One should also watch for what effect, if any, higher energy costs have had on the Frito Lay division, which accounts for 60% of PEP's sales.
We expect PepsiCo to deliver a solid quarter buttressed by robust beverage volume. We rate Pepsi a strong buy because of the company's broad revenue profile, enviable international footprint, and potential for margin expansion vis-a-vis cost containment.
PEP 1-yr Chart