The Coca-Cola Company (KO), Dr Pepper Snapple Group Inc. (DPS): Is This Insider Sale at This Beverage Company a Bearish Sign?

PepsiCo, on the other hand, has been a target of famous activist investor Nelson Peltz. It currently has two different businesses with two different fundamentals: a very profitable snack business and a beverage business with lower profitability. The snack business demands less innovation, whereas the beverage business requires fast moving culture and consumer-led innovation.

Nelson Peltz suggested that PepsiCo should acquire emerging food giant Mondelez, then spin-off the beverage business or at least separate the two businesses. He expects that the merger would be valued at around 8.6 times its 2013 EBITDA, including $3.7 billion in cost synergies and result in margin expansion from Mondelez’s business.

My Foolish take

Dr Pepper Snapple, with the global leading position, the highest dividend yield, and the lowest valuation could fit well in investors’ portfolios. In the long run, the company could deliver a decent return. So do PepsiCo and Coca-Cola. Among the three, I like PepsiCo the most with Nelson Peltz’s activism. He could keep pushing for the separation of the snack business and the beverage business to unlock potential shareholder value.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo.

The article Is This Insider Sale at This Beverage Company a Bearish Sign? originally appeared on Fool.com and is written by Anh HOANG.

Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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