Reviewing PepsiCo (NASDAQ:PEP) & Reeds (OTCMKTS:REED)

PepsiCo (NASDAQ:PEP) and Reeds (OTCMKTS:REED) are both consumer staples companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Risk and Volatility

PepsiCo has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500. Comparatively, Reeds has a beta of 0.21, suggesting that its stock price is 79% less volatile than the S&P 500.

Insider and Institutional Ownership

73.1% of PepsiCo shares are owned by institutional investors. Comparatively, 51.5% of Reeds shares are owned by institutional investors. 0.1% of PepsiCo shares are owned by insiders. Comparatively, 88.0% of Reeds shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PepsiCo	8.23%	57.81%	10.63%
Reeds	-43.28%	N/A	-69.61%

Valuation & Earnings

This table compares PepsiCo and Reeds”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PepsiCo	$91.85 billion	2.11	$9.58 billion	$5.49	25.82
Reeds	$37.95 million	1.41	-$13.15 million	($1.22)	-0.82

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

Analyst Recommendations

This is a summary of recent ratings and price targets for PepsiCo and Reeds, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PepsiCo	1	14	4	0	2.16
Reeds	0	0	1	0	3.00

PepsiCo currently has a consensus price target of $158.60, suggesting a potential upside of 11.88%. Reeds has a consensus price target of $1.75, suggesting a potential upside of 75.00%. Given Reeds’ stronger consensus rating and higher probable upside, analysts clearly believe Reeds is more favorable than PepsiCo.

Summary

PepsiCo beats Reeds on 11 of the 14 factors compared between the two stocks.

About PepsiCo

PepsiCo, Inc. engages in the manufacture, marketing, distribution, and sale of various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region. It provides dips, cheese-flavored snacks, and spreads, as well as corn, potato, and tortilla chips; cereals, rice, pasta, mixes and syrups, granola bars, grits, oatmeal, rice cakes, and side dishes; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea, coffee, and juices; dairy products; and sparkling water makers and related products, as well as distributes alcoholic beverages under Hard MTN Dew brand. The company offers its products primarily under the Lay’s, Doritos, Fritos, Tostitos, BaiCaoWei, Cheetos, Cap’n Crunch, Life, Pearl Milling Company, Gatorade, Pepsi-Cola, Mountain Dew, Quaker, Rice-A-Roni, Aquafina, Bubly, Emperador, Diet Mountain Dew, Diet Pepsi, Gatorade Zero, Crush, Propel, Dr Pepper, Schweppes, Marias Gamesa, Ruffles, Sabritas, Saladitas, Tostitos, 7UP, Diet 7UP, H2oh!, Manzanita Sol, Mirinda, Pepsi Black, Pepsi Max, San Carlos, Toddy, Walkers, Chipsy, Kurkure, Sasko, Spekko, White Star, Smith’s, Sting, SodaStream, Lubimyj Sad, Agusha, Chudo, Domik v Derevne, Lipton, and other brands. It serves wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, and others through a network of direct-store-delivery, customer warehouse, and distributor networks, as well as directly to consumers through e-commerce platforms and retailers. The company was founded in 1898 and is based in Purchase, New York.

About Reeds

Reed's, Inc. engages in the manufacture and distribution of natural beverages in the United States. The company offers Reed's craft ginger beer; Reed's real ginger ales; Reed's Classic Mules; Reed's Hard Ginger Ale; Reed's ready to drink products; and Virgil's handcrafted sodas. It sells its products to natural food and gourmet retailers, grocery store chains, mass merchants, club stores, convenience and drug stores, liquor stores, industrial cafeterias, and on-premise bars and restaurants, as well as directly to consumers through www.drinkreeds.com. The company was formerly known as Original Beverage Corporation and changed its name to Reed's, Inc. in 2001. Reed's, Inc. was founded in 1987 and is headquartered in Norwalk, Connecticut.