PepsiCo (PEP) may be No. 2 in colas after Coca-Cola (KO), but it’s the leading player in the broader snack and beverage market. Indeed Pepsi is the largest snack-food maker in the world. The company’s beverage and snack brands include Pepsi, Gatorade, Tropicana, Lay's, Doritos, and Quaker. PepsiCo owns most of its bottling operations in North America and distributes directly to stores via independent bottlers overseas.

Pepsi accounts for about 39 percent of the U.S. snack market and a first-place share of 23 percent of Western Europe’s market. The North American snack unit is Pepsi's most profitable, producing 26 percent of total revenue last year and 42 percent of profit, according to Morningstar data.

In the first quarter Pepsi’s sales jumped 27 percent to $11.9 billion from a year earlier. While net income slid to $1.14 billion from $1.43 billion, the year-earlier quarter included an accounting gain of $958 million.

Strong chip sales overseas, especially in emerging markets, helped boost performance. Snack sales volume climbed 3 percent globally, while beverage sales gained 3.5 percent, excluding the impact of acquisitions.

PepsiCo forecasts that its earnings-per-share will increase by 7 percent to 8 percent for the year as a whole, excluding some costs and the impact of currency fluctuation. Pepsi recently raised its dividend by 7.3 percent.

Bullish analysts

Analysts were impressed with the earnings report. Both Goldman Sachs and Credit Suisse upgraded their stock rating for the company, and Stifel Nicolaus and UBS raised their share price targets.

Goldman boosted its rating to conviction buy from buy for Pepsi. “Bottom line — we see more than 20 percent total return potential in this high quality staple name, as North American beverage volumes stabilize, modest pricing and cost synergies drive 10 percent EPS (earnings per share) growth, plus a multiple re-rating close to its historical norm,” the Goldman analysts write.

They say Pepsi is poised to generate a "best-in-class" compound annual profit growth rate during the next few years.