The problem is that these changes will occur when the company is facing greater challenges. This will hurt their competitive position, profit margins, stock performance and brand image. The above information will impact an investor's decision, by making them more cautious about purchasing the company over the long-term. ("The Coca Cola Company," 2012) ("Pepsi Co," 2012)
As far as Pepsi Co is concerned, the management has taken a continuing focus on expanding into new areas. This has resulted in the company owning different food, beverage and snack manufacturers. In these situations, the firm is concentrating on the impact that key acquisitions will have on Pepsi and its ability to enter new markets. ("The Coca Cola Company," 2012) ("Pepsi Co," 2012)
This strategy has proven to be highly successful. As the company is able to reach out to consumers through the large variety of merchandise they are selling. This means that even if a customer selects a competitor's product. The odds are high that they will also choose another brand that Pepsi owns (only in a different area such as: food, snacks or dairy). This helps the firm to increase its profit margins and continue to promote themselves. These facts will assist investors in making an informed choice about future levels of growth and the firm's competitive position. ("The Coca Cola Company," 2012) ("Pepsi Co," 2012)
Based on your review of the financial data for each company, indicate the accuracy and reliability of the data for making investment decision. Provide support for your conclusion.
All sources of information are accurate and reliable. This is because it was collected from data that is filed in accordance with the Securities and Exchange Act of 1934. This requires that all firms must submit information which has been certified through an independent auditor. (Dravis, 2007)
Moreover, the Sarbanes-Oxley Act of 2002 forces all CEOs / CFOs to certify that the data and statements are factually accurate. These laws are evidence of how the information on both firms is complete. Otherwise, anyone who knowingly misleads the public can be charged criminally under this statute. (Dravis, 2007)
Recommend which company you consider as the better investment for your client and how you will present your recommendation. Support your recommendation with data from your analysis.
The company that is the better investment is Pepsi Co. This is because the firm is diversified in a number of industries and markets. These factors are allowing the corporation to reach out to a larger demographic...
Evidence of this can be seen by comparing the earnings results for Pepsi Co with Coca Cola during the last year. What makes Pepsi a compelling buy, is the fact that they have consistently increasing earnings and are always seeking to enhance these numbers. The below table is demonstrating this by contrasting the earnings per share of Pepsi and Coke for 2012. ("The Coca Cola Company," 2012) ("Pepsi Co," 2012)
Pepsi Co vs. Coca Cola Earnings per Share
Company
Pepsi Co
$.67
$1.09
$1.16
$1.05
Coca Cola
$.44
$.59
$.51
$.44
("The Coca Cola Company," 2012) ("Pepsi Co," 2012)
These figures are showing how Pepsi Co has greater earnings and more consistency in their numbers. This is directly related to the business model and strategies they are utilizing.
The results are highlighting how the firm is more diversified and is rapidly expanding into growing markets. In the future, this will contribute to above average growth rates and an increase the dividends received by investors. This is the point that their total returns will be higher by purchasing Pepsi Co over Coke. ("The Coca Cola Company," 2012) ("Pepsi Co," 2012)
References
The Coca Cola Company. (2012). Yahoo Finance. Retrieved from: http://finance.yahoo.com/q/pr?s=KO+Profile
Pepsi Co. (2012). Yahoo Finance. Retrieved from: http://finance.yahoo.com/q/pr?s=PEP+Profile
Pepsi Co Concludes. (2011). Seeking Alpha. Retrieved from: http://seekingalpha.com/article/293068-pepsi-concludes-wimm-bill-dann-buy-in-largest-ever-foreign-acquisition-of-russian-company
Bell, L. (2003). The Story of Coca Cola. North Mankato, MN: A +
Cramer, J. (2005). Jim Cramer's. New York, NY: Simon and Schuster.
Dravis, B. (2007). The Role of Independent Directors. Chicago, IL: ABA.
Esteral, M. (2011). A Frosty Reception. WSJ. Retrieved from: http://online.wsj.com/article/SB10001424052970204012004577070521211375302.html
Kaplan, a. (2010). What Pepsi Hopes. Beverage World. Retrieved from: http://www.pepsico.com/Download/Beverage_World_Cover_Story_0410_(2).pdf
Steinberg, J. (2013). Is Coca Cola's Growth Story Over. Fool.com. Retrieved from: http://beta.fool.com/jacobsteinberg/2013/02/21/coca-colas-growth-story-over/24591/?ticker=KO&source=eogyholnk
Stodard, B. (1997). Pepsi. Los Angeles, CA: General Publishing Group.
