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Pepsi Earnings: Looking at Products, Bottlers & More

When PepsiCoreports earnings before Thursday's opening bell, there is plenty to look at, from international growth rates to the impact of new products.

AP

According to Thomson Reuters, look for earnings of $1.22 a share on $15.37 billion in revenues. For the same quarter a year ago, Pepsi earned $1.09 with just over $11 billion.

Jonathan Feeney of Janney Capital increased his estimates on Wednesday, despite a drag from expansion costs. Feeney cited the strength of the snack and beverage business.

Another potential positive is the cost-savings through the acquisition of the two Pepsi bottlers.

On CNBC earlier this week, CEO Indra Nooyi gave a glimpse into the acquisitions, confirming that they will save $400 million annually.

Even though Nooyi could not provide specifics before earnings, she did touch on some important trends, starting with the U.S. economy.

"If you look at some of the underlying economic statistics, jobless claims or housing starts, you could argue that the picture is getting better," she said. "But if you look at underlying consumer sentiment, perhaps resulting from the lack of meaningful change in the unemployment numbers, I think the situation is a little bit more cloudy."

Nooyi added that Latin America and Asia continue to show strength, and that although Europe is generally weak, Russia and the United Kingdom have rebounded with strength.

Pepsi has 19 brands with at least $1 billion in global sales, but lately, it has put a lot of emphasis on one in particular: Pepsi Max.

Investors will watch to see whether the brand has built on its currently miniscule market share. Another thing to monitor with Pepsi Max is if it has had any impact on taking business away from Coca-Cola's zero-calorie offering, Coke Zero.

"Since they launched new ad campaign, they are up about 45 percent," says John Sicher, Editor and Publisher of Beverage Digest. "Their market share and volume are both growing."

Sicher also says watch Gatorade, which is also making a nice comeback.

"Base Gatorade is growing 15 percent," he said. "And the G-Series approach and marketing is working well. "The company gettong some modest additional volume from new products."

Another thing to watch is margins. Commodity prices rose throughout the previous quarter, and it will be interesting to see if pricing power offset this or whether margins are starting to get squeezed.

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