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Tuesday, October 31, 2006

Investors Prefer Coke Over Pepsi in October



Unless Coca-Cola (KO) manages a corporate blunder in the next few hours, it will be KO that has won the investor taste test challenge over Pepsi (PEP) for the month of October.

KO closed September 29 at $44.68, and was at $46.75 on last look. KO is up from an adjusted closing price at the close of 2005 after dividend of $39.46 and nominally closing at $40.31.

PEP closed September 29 at $65.26, and was down $0.33 on the day at $63.20 on last look. PEP is up from an adjusted closing price at the close of 2005 after dividend of $58.26 and nominally closing at $59.08.

Both companies did fairly well on earnings this month.

Two weeks ago KO posted $0.62 EPS vs $0.59 est. and revenues $6.45 Billion instead of almost $6.2 Billion. It even showed a 5% increase in its case volumes. After earnings Merrill Lynch added KO to its Focus One List. Ko also announced price hikes for its orange drinks because of rising orange juice prices.

Almost 3 weeks ago PEP also beat earnings with $0.88 EPS and Revenues of $8.95 Billion, compared to estimates of $0.86 and $8.8 Billion respectively. It also reaffirmed at least $2.98 fiscal EPS, and $2.98 happens to be the consensus estimate. At recent meetings, PEP has announced intentions to consolidate its Frito Lay network and put EPS growth at 7%.

Jon C. Ogg
October 31, 2006
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