The Dividend Aristocrat With 53% Margins Just Widened the Gap on the Frozen Dividend Competitor

"PepsiCo's Q3 showed revenue climbing 2.7% year over year to $23.94 billion, driven by its Frito-Lay snacks portfolio and steady beverage demand. Gross margins reached 53.6%, reflecting pricing power across brands like Doritos, Cheetos, and Gatorade. Operating income hit $3.57 billion with a 14.9% margin. Management highlighted premiumization in snacks and international expansion as core drivers, with CFO Stephen Schmitt noting strength in convenience channels."

"Kraft Heinz posted Q3 revenue of $6.24 billion, essentially flat, with gross margins at 31.9%. Operating income reached $1.03 billion on a 16.4% margin. The company beat estimates for the fourth consecutive quarter, yet annual EPS has stagnated between $2.78 and $3.06 since 2021. Brands like Oscar Mayer and Philadelphia cream cheese face intense private label competition, and management has struggled to reignite growth beyond cost-cutting."

"Scale, Portfolio Breadth, and Strategic Execution Separate Them PepsiCo operates with nearly seven times Kraft Heinz's market capitalization at $197.5 billion. Its dual-pillar strategy balancing beverages and snacks provides resilience. Frito-Lay alone generates higher margins than most of Kraft Heinz's entire portfolio. PepsiCo's return on equity stands at 37.2%, demonstrating efficient capital deployment, while Kraft Heinz shows negative 9.69% ROE due to losses."

PepsiCo grew Q3 revenue 2.7% to $23.94 billion, achieved 53.6% gross margins, $3.57 billion operating income, and emphasized premiumization and international expansion as growth drivers. Kraft Heinz reported flat $6.24 billion revenue, 31.9% gross margins, $1.03 billion operating income, and a fourth consecutive quarter of beats while annual EPS has largely stagnated since 2021. PepsiCo's larger scale and dual beverages-and-snacks portfolio deliver stronger margins and a 37.2% ROE. Kraft Heinz faces intense private-label competition, a long-frozen $0.40 quarterly payout after a 2019 cut, and trailing twelve-month EPS of negative $3.71.

Read at 24/7 Wall St.