Does Pepsi Guidance Even Matter? (PEP, PBG, KO)

PepsiCo, Inc. (NYSE: PEP) issued a statement this morning noting that the company would reaffirm its core guidance at the Morgan Stanley Global Consumer and Retail Conference.  Pepsi is reaffirming its previously announced full-year 2008 core EPS guidance, although the full-year 2008 core EPS guidance excludes impacts on commodity mark-to-market, productivity for growth costs, and its share of the Pepsi Bottling Group’s (NYSE: PBG) restructuring initiative and impairment charge already announced this week.

PBG is expected to have a $0.07 hit to earnings on full-year 2008reported EPS, but is not expected toimpact full-year 2008 core EPS results.

Pepsi gave 2008 guidance of $3.67 to $3.68 EPS last month, and itexpected 3% to 5% volume growth and low-double-digit net revenue growth.

Does this have any impact for Coca-Cola (NYSE: KO)?  Unlikely.  Pepsishares have at least stabilized over the last month.  They haveunfortunately lost about one-third of their value since September andare down even worse from the year highs.  Coca-Cola shares areessentially in the same boat and are down about one-third fromhighs.

Sometimes, not even defensive stocks work.  Besides that, by now it isobvious that a phrase could be added as a conclusion to any piece wherea company tries to defend its share: "It doesn’t matter, sellers aretaking it down further any way."

Interesting times indeed.

Jon C. Ogg
November 20, 2008