Head-To-Head Analysis: PepsiCo (NASDAQ:PEP) & Coca-Cola (NYSE:KO)

Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP) are both large-cap consumer staples companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, institutional ownership, earnings, profitability and dividends.

Profitability

This table compares Coca-Cola and PepsiCo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Coca-Cola	28.65%	38.79%	13.50%
PepsiCo	11.09%	53.08%	10.42%

Earnings and Valuation

This table compares Coca-Cola and PepsiCo”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Coca-Cola	$47.94 billion	8.59	$13.11 billion	$3.40	28.14
PepsiCo	$98.24 billion	1.96	$8.24 billion	$7.96	17.76

Coca-Cola has higher earnings, but lower revenue than PepsiCo. PepsiCo is trading at a lower price-to-earnings ratio than Coca-Cola, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations and price targets for Coca-Cola and PepsiCo, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Coca-Cola	0	3	20	1	2.92
PepsiCo	1	14	4	1	2.25

Coca-Cola presently has a consensus target price of $97.26, indicating a potential upside of 1.65%. PepsiCo has a consensus target price of $143.28, indicating a potential upside of 1.37%. Given Coca-Cola’s stronger consensus rating and higher probable upside, analysts plainly believe Coca-Cola is more favorable than PepsiCo.

Institutional & Insider Ownership

70.3% of Coca-Cola shares are held by institutional investors. Comparatively, 73.1% of PepsiCo shares are held by institutional investors. 0.9% of Coca-Cola shares are held by company insiders. Comparatively, 0.1% of PepsiCo shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Coca-Cola pays an annual dividend of $2.12 per share and has a dividend yield of 2.2%. PepsiCo pays an annual dividend of $5.92 per share and has a dividend yield of 4.2%. Coca-Cola pays out 62.4% of its earnings in the form of a dividend. PepsiCo pays out 74.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Coca-Cola has raised its dividend for 64 consecutive years and PepsiCo has raised its dividend for 54 consecutive years.

Volatility and Risk

Coca-Cola has a beta of 0.28, suggesting that its stock price is 72% less volatile than the S&P 500. Comparatively, PepsiCo has a beta of 0.31, suggesting that its stock price is 69% less volatile than the S&P 500.

Summary

Coca-Cola beats PepsiCo on 11 of the 17 factors compared between the two stocks.

About Coca-Cola

The Coca-Cola Company, a beverage company, manufactures, markets, and sells various nonalcoholic beverages worldwide. The company provides sparkling soft drinks, sparkling flavors; water, sports, coffee, and tea; juice, value-added dairy, and plant-based beverages; and other beverages. It also offers beverage concentrates and syrups, as well as fountain syrups to fountain retailers, such as restaurants and convenience stores. The company sells its products under the Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, caffeine free Diet Coke, Cherry Coke, Fanta Orange, Fanta Zero Orange, Fanta Zero Sugar, Fanta Apple, Sprite, Sprite Zero Sugar, Simply Orange, Simply Apple, Simply Grapefruit, Fresca, Schweppes, Thums Up, Aquarius, Ayataka, BODYARMOR, Ciel, Costa, Dasani, dogadan, FUZE TEA, Georgia, glacéau smartwater, glacéau vitaminwater, Gold Peak, Ice Dew, I LOHAS, Powerade, Topo Chico, AdeS, Del Valle, fairlife, innocent, Minute Maid, and Minute Maid Pulpy brands. It operates through a network of independent bottling partners, distributors, wholesalers, and retailers, as well as through bottling and distribution operators. The company was founded in 1886 and is headquartered in Atlanta, Georgia.

About PepsiCo

PepsiCo, Inc. engages in the manufacture, marketing, distribution, and sale of various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region. It provides dips, cheese-flavored snacks, and spreads, as well as corn, potato, and tortilla chips; cereals, rice, pasta, mixes and syrups, granola bars, grits, oatmeal, rice cakes, and side dishes; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea, coffee, and juices; dairy products; and sparkling water makers and related products, as well as distributes alcoholic beverages under Hard MTN Dew brand. The company offers its products primarily under the Lay’s, Doritos, Fritos, Tostitos, BaiCaoWei, Cheetos, Cap’n Crunch, Life, Pearl Milling Company, Gatorade, Pepsi-Cola, Mountain Dew, Quaker, Rice-A-Roni, Aquafina, Bubly, Emperador, Diet Mountain Dew, Diet Pepsi, Gatorade Zero, Crush, Propel, Dr Pepper, Schweppes, Marias Gamesa, Ruffles, Sabritas, Saladitas, Tostitos, 7UP, Diet 7UP, H2oh!, Manzanita Sol, Mirinda, Pepsi Black, Pepsi Max, San Carlos, Toddy, Walkers, Chipsy, Kurkure, Sasko, Spekko, White Star, Smith’s, Sting, SodaStream, Lubimyj Sad, Agusha, Chudo, Domik v Derevne, Lipton, and other brands. It serves wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, and others through a network of direct-store-delivery, customer warehouse, and distributor networks, as well as directly to consumers through e-commerce platforms and retailers. The company was founded in 1898 and is based in Purchase, New York.