Comparing PepsiCo (NASDAQ:PEP) and Coca-Cola (NYSE:KO)

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

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Coca-Cola	$47.94 billion	8.74	$13.11 billion	$3.40	28.65
PepsiCo	$93.92 billion	2.06	$8.24 billion	$7.96	17.87

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.

Risk and Volatility

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

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 increased its dividend for 64 consecutive years and PepsiCo has increased its dividend for 54 consecutive years.

Institutional and Insider Ownership

70.3% of Coca-Cola shares are owned by institutional investors. Comparatively, 73.1% of PepsiCo shares are owned by institutional investors. 0.9% of Coca-Cola shares are owned by company insiders. Comparatively, 0.1% of PepsiCo shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

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%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Coca-Cola and PepsiCo, as reported by MarketBeat.com.

	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 currently has a consensus target price of $97.26, indicating a potential downside of 0.15%. PepsiCo has a consensus target price of $143.28, indicating a potential upside of 0.72%. Given PepsiCo’s higher possible upside, analysts plainly believe PepsiCo is more favorable than Coca-Cola.

Summary

Coca-Cola beats PepsiCo on 10 of the 17 factors compared between the two stocks.

About Coca-Cola

The Coca-Cola Company (NYSE: KO) is a global beverage company headquartered in Atlanta, Georgia. Founded in 1886, it is best known for Coca-Cola, one of the world’s most recognized soft drink brands. The company owns, licenses, and markets a broad portfolio of beverages, including sparkling soft drinks, water, sports drinks, coffee, tea, juice, dairy and plant-based beverages, and energy drinks. Its brands include Coca-Cola, Diet Coke, Coca-Cola Zero Sugar, Sprite, Fanta, Dasani, smartwater, Powerade, Minute Maid, Simply, fairlife, and Costa Coffee, among others.

About PepsiCo

PepsiCo, Inc. is a global food and beverage company that develops, manufactures, markets and distributes a broad range of products. Its portfolio includes snacks such as Lay’s, Doritos and Cheetos, as well as beverages including Pepsi, Gatorade and Mountain Dew. The company was formed in 1965 through the merger of Pepsi-Cola and Frito-Lay. Its products are sold in more than 200 countries and territories through retail, food-service and other distribution channels. PepsiCo is headquartered in Purchase, New York.