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Pepsi (NYSE:PBG) released Q1 numbers earlier today. Mondays drop in the final hours of trading was a little suspicious. The results indicate that while the company claims net revenue per case grew 4%, Gross Profit only rose 2% when comparing results to last years comparable Q1. Operating profit actually dropped slightly.

Marketing results vary dramatically from region to region. Growth in the US is almost non existent.

The most telling sign is the reduction in cash position. Operations generated very little new cash. Significant short term borrowings are being utilized to fund dividends and share buy backs. Net profit is down significantly.

Diluted EPS is down by two cents despite Pepsi buying back 10 million shares to achieve a short term magic trick which would disguise inadequate EPS trends.

Bad news Disappointing news Hmmm just maybe we should be watching Pepsi which trades near its 52 week low. There are still a great many fundamental issues which Pepsi Bottling is falling short on. Need to see some signs of significant and durable fixes before we stop laughing at management.

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