Earnings Preview: PepsiCo Inc.

MILWAUKEE — Soft drink and snack maker PepsiCo Inc. reports earnings for its fiscal third quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The Purchase, N.Y.-based PepsiCo locked in a deal to buy its two biggest U.S. bottlers after months of trying. The company says the $7.8 billion deal will help it cut costs and compete better in North America by getting to market quicker with new products.

CEO Indra Nooyi said this is key because soft drink sales have been flat or fallen as consumers move toward healthier juices and teas. The company is second in the soft drinks market, behind Coca-Cola Co., and a major player in snacks with its Frito-Lay division.

PepsiCo first offered $6 billion in April for the two bottlers, Pepsi Bottling Group and PepsiAmericas. Both rejected the bid, saying it undervalued them.

The deal was sealed in August and on Monday PepsiCo said it will form a new bottling unit — PepsiCo Bottling North America — with Eric J. Foss, head of Pepsi Bottling Group, as CEO.

BY THE NUMBERS: Analysts polled by Thomson Reuters expect third-quarter profit of $1.02 per share on revenue of $11.26 billion for the three-month period that ended in September. In the same period a year earlier, it earned $1.01 a share on $11.24 billion in revenue.

ANALYST TAKE: Barclays Capital analyst Michael Branca raised his estimate for PepsiCo’s third-quarter earnings per share by 3 cents to $1.03, saying a rise in Frito-Lay sales offset the fall in soft drink sales.

He expects the company’s costs to fall next fiscal year thanks to the bottler deal and declining commodity costs, but he said the bottler deal won’t be a “quick fix for the North American beverage business.” It will help the company be flexible and have time to develop strategies to navigate the market.

WHAT’S AHEAD: Analysts say the deal to buy the bottlers will change the beverage landscape in North America because it will give PepsiCo more control over which products make it to market and how they are displayed in stores.

The company is continuing to focus on international business, especially in developing markets like Russia.

It’s also unclear how possible federal and local taxes on sodas and other sweetened beverages will play out. Nutrition and economics experts are proposing a federal tax of 1 cent on every ounce of these beverages to fight obesity. Government officials even mentioned the idea as a way to pay for health care reform, but that’s not seen as likely to happen.

STOCK PERFORMANCE: Shares rose 5.8 percent in the quarter to finish at $55.93. They closed Monday at $60.85, at the higher end of their 52-week range of $43.78 to $71.60.