PepsiCo to Buy Siete in a $1.2B Deal: Will it Boost the Stock?
PepsiCo, Inc. PEP benefits from strength in core categories, diversified portfolio, modernized supply chain, improved digital capabilities and flexible go-to-market distribution systems. In the latest revelation, the company has agreed to buy Garza Food Ventures LLC, dba Siete Foods (Siete), worth $1.2 billion.
More on PEP’s Latest Transaction
Founded 10 years back, Siete offers Mexican-American food. This deal looks forward to complementing PepsiCo's portfolio by adding this attractive Mexican-American brand, apart from expanding the better-for-you offerings.
The deal will add new heritage-inspired Siete products to PepsiCo’s portfolio. Siete makes authentic tortillas, salsas, seasonings, sauces, cookies and snacks, among others. Its products are available in grocery stores, club stores and organic food retailers mainly in the United States.
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Hence, PepsiCo is quite excited to carry forward the legacy of the Garza family. Management looks to create and expand PEP’s multicultural portfolio with the incredible food offerings of Siete. This will further strengthen its snacking category and enable it to reach out to more consumers with Siete’s authentic food offerings.
PepsiCo’s Other Notable Efforts
PepsiCo’s robust strategies position it well for growth ahead. The company is focused on boosting greater efficiency by reducing costs and investing these savings back to develop scale and core capabilities. PEP expects to achieve the productivity goal through savings generated from restructuring actions. Such actions aim at further simplifying, synchronizing and automating processes.
The company also concentrates on holistic cost-management initiatives to boost productivity. It uses these savings to mitigate cost inflation and prioritize investments in its brands as well as for innovation and channel expansion. Such cost-management initiatives have been aiding PEP’s margins for a while. In addition, it has been reinforcing its international footprint.
PEP’s Performance
Shares of this beverage giant have gained 6.2% in the past three months compared with the industry’s 9.2% growth. The company has been facing challenges in its North American operations since the start of 2024, affecting its overall sales performance.
Nevertheless, the aforesaid transaction, coupled with its robust strategic efforts, will likely boost this Zacks Rank #3 (Hold) company’s performance.
Stocks to Consider
The Chef's Warehouse CHEF, which is a distributor of specialty food products in the United States, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average.
The Zacks Consensus Estimate for CHEF’s current financial-year sales and earnings per share (EPS) indicates growth of 9.7% and 12.6%, respectively, from the year-ago numbers.
Flowers Foods FLO offers baked items and has a Zacks Rank # 2 (Buy) at present. FLO has a trailing four-quarter average earnings surprise of 1.9%.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and EPS implies growth of 1% and 5%, respectively, from the year-ago numbers.
Nomad Foods NOMD, which manufactures frozen foods, currently carries a Zacks Rank of 2. NOMD has a trailing four-quarter earnings surprise of 3.1%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and EPS indicates growth of 4.3% and 12.6%, respectively, from the year-ago numbers.
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PepsiCo, Inc. (PEP) : Free Stock Analysis Report
Flowers Foods, Inc. (FLO) : Free Stock Analysis Report
The Chefs' Warehouse, Inc. (CHEF) : Free Stock Analysis Report
Nomad Foods Limited (NOMD) : Free Stock Analysis Report