Critical Comparison: PepsiCo (NYSE:PEP) & Reed’s (NYSE:REED)

PepsiCo (NYSE:PEP – Get Rating) and Reed’s (NYSE:REED – Get Rating) are both consumer defensive companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for PepsiCo and Reed’s, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PepsiCo	0	0	0	0	N/A
Reed’s	0	0	0	0	N/A

Valuation and Earnings

This table compares PepsiCo and Reed’s’ top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PepsiCo	$86.39 billion	2.76	$8.83 billion	$6.41	27.04
Reed’s	$50.78 million	0.21	-$23.43 million	($9.00)	-0.44

PepsiCo has higher revenue and earnings than Reed’s. Reed’s is trading at a lower price-to-earnings ratio than PepsiCo, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares PepsiCo and Reed’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PepsiCo	N/A	N/A	N/A
Reed’s	N/A	N/A	N/A

Volatility and Risk

PepsiCo has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500. Comparatively, Reed’s has a beta of 1.6, suggesting that its stock price is 60% more volatile than the S&P 500.

Institutional & Insider Ownership

70.8% of PepsiCo shares are held by institutional investors. Comparatively, 35.8% of Reed’s shares are held by institutional investors. 0.1% of PepsiCo shares are held by insiders. Comparatively, 29.9% of Reed’s shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

PepsiCo beats Reed’s on 6 of the 8 factors compared between the two stocks.

About PepsiCo

(Get Rating)

PepsiCo, Inc. engages in the manufacture, marketing, distribution, and sale of beverages, food, and snacks. It operates through the following business segments: Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), PepsiCo Beverages North America (PBNA), Latin America (LatAm), Europe, Africa, Middle East, and South Asia (AMESA), and Asia Pacific, Australia and New Zealand, and China Region (APAC). The FLNA segment markets, distributes, and sells snack foods under the Lay’s, Doritos, Cheetos, Tostitos, Fritos, Ruffles, and Santitas brands. The QFNA segment includes cereals, rice, and pasta under the Quaker, Pearl Milling Company, Quaker Chewy, Cap’n Crunch, Life, and Rice-A-Roni brands. The PBNA segment is composed of beverage concentrates, fountain syrups, and finished goods under various beverage brands such as Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Diet Mountain Dew, Sierra Mist, and Mug. The LatAm segment covers beverage, food, and snack businesses in the Latin American region. The Europe segment includes beverage, food, and snack goods in Europe and Sub-Saharan Africa regions. The AMESA segment deals with all beverage and convenient food businesses in

About Reed’s

(Get Rating)

Reed’s, Inc. engages in the manufacture and distribution of carbonated and non-carbonated beverages. Its product lines include Reed’s Ginger Brews, Virgil’s Root Beer, and Flying Caldron Butterscotch Beer. The company was founded by Christopher J. Reed in June 1987 and is headquartered in Norwalk, CT.