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Analyst Blog

The Frito-Lay division of PepsiCo, Inc. (PEP - Free Report) recently introduced a snack under its popular brand Cheetos. The new product called Cheetos Mix-Ups includes a mix of four cheesy Cheetos flavors in different shapes and colors in a single bag.

Cheetos Mix-Ups comes in two varieties, Xtra Cheezy and Cheezy Salsa, each pack containing four different flavors.  The new product will allow consumers to enjoy four different flavors and textures under each combination.  

There is a huge demand for new snacking products that tickle the taste buds. The introduction of these new combinations is likely to catch the interest of Cheetos lovers.

Product innovation plays a huge role in the company’s success. PepsiCo regularly creates new flavors of existing products as well as maintains a robust pipeline of new products.  The company had recently introduced a new flavor of potato chips under its popular brand Ruffles. The new product brings the flavor of the popular snack beer-battered onion rings to Ruffles MAX beer-battered onion rings flavored potato chips.

Overall, we are encouraged by the company’s strong brand portfolio, its product and geographic diversity and solid cash flow generation. Moreover, PepsiCo reported impressive fourth-quarter results beating the Zacks Consensus Estimate for both revenues and earnings. In addition, the company provided an impressive outlook for 2013, which was in line with its long-term targets, and also increased its dividend rate. On the other hand, PepsiCo’s rival, The Coca-Cola Company (KO - Free Report) , reported mixed fourth quarter results, beating the earnings estimate but missing out on sales.

However, we prefer to remain on the sidelines as a challenging consumer spending environment and continued sluggishness in the North American beverage business concerns us.

PepsiCo carries a Zacks Rank #3 (Hold).

Other companies in the sector, which are better positioned at current levels include Coca-Cola Hellenic Bottling Company S.A. carrying a Zacks Rank #1 (Strong Buy) and Coca-Cola Enterprises Inc. (CCE - Free Report) carrying a Zacks Rank #2 (Buy).


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