PepsiCo’s strong snacks business to offset softer beverage sales Getty ImagesPepsiCo’s snack business expected to offset softer drink salesPepsiCo Inc. is scheduled to report third-quarter earnings before the market opens on Thursday, two weeks ahead of rivals Coca-Cola Co. and Dr Pepper Snapple Group. Industrywide soft drink sales have slowed over the past five years, reflecting a widening pool of health-conscious consumers who are opting for healthier products over sugary soft drinks. PepsiCo PEP, -0.29% has largely been able to outperform the market, clearly benefiting from a robust snacks and packaged foods group, which includes the Doritos and Quaker Oats brands. In the second quarter, PepsiCo topped Wall Street’s revenue and earnings per share expectations, prompting the company to lift fiscal 2014 estimates. The pressure is on for Frito-Lay to continue its upward sales momentum in the third quarter, as analysts are forecasting a decline in beverages, PepsiCo’s largest operating unit by sales. Here’s what to expect this week: Earnings: Analysts on average are calling for Purchase, N.Y.-based PepsiCo to post adjusted earnings per share of $1.29, according to a FactSet poll. That would mark a 4% year-over-year increase from $1.24 during the same quarter in 2013. Net income is projected to come in at $1.96 billion, a slight increase from $1.94 billion last year. Revenue: The consensus has sales coming in at $17.1 billion, which would mark a 1.2% increase from $16.9 billion last year. PepsiCo Americas Beverage, its soft drink category that includes the Pepsi and Mountain Dew brands, is forecast to decline slightly to $5.36 billion from $5.4 billion a year ago. Analysts predict that will be partially offset by growth in Frito-Lay North America. Stock reaction: Shares of PepsiCo were slightly lower on Tuesday, although they remain up more than 12% year-to-date, outperforming the broader S&P 500, which is up 6.2%. Analysts have a mean target price on PepsiCo of $97.78, according to FactSet. What to watch for: PepsiCo is on track to return more than $8.7 billion to shareholders this fiscal year. Shareholders will have an eye on whether PepsiCo maintained that pace through dividends and share buybacks during the third quarter. Investors will also hone in on PepsiCo’s fourth-quarter outlook, and whether it can help tip the company toward its raised fiscal 2014 profit outlook. At the minimum, PepsiCo will be expected to reaffirm its full-year guidance. Rivals Coca-Cola Co. KO, +0.73% and Dr Pepper Snapple Group Inc. DPS, -0.80% are on tap to report Oct. 21 and Oct. 23, respectively. http://www.marketwatch.com/