Head to Head Analysis: CocaCola (NYSE:KO) and Diageo (OTCMKTS:DGEAF)

CocaCola (NYSE:KO) and Diageo (OTCMKTS:DGEAF) are both consumer staples companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, earnings, institutional ownership, profitability and dividends.

Insider & Institutional Ownership

70.3% of CocaCola shares are held by institutional investors. Comparatively, 33.3% of Diageo shares are held by institutional investors. 0.9% of CocaCola shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares CocaCola and Diageo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CocaCola	28.56%	39.38%	13.18%
Diageo	N/A	N/A	N/A

Dividends

CocaCola pays an annual dividend of $2.12 per share and has a dividend yield of 2.3%. Diageo pays an annual dividend of $0.52 per share and has a dividend yield of 2.2%. CocaCola pays out 63.7% of its earnings in the form of a dividend. Diageo pays out 66.3% 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. CocaCola has raised its dividend for 64 consecutive years. CocaCola is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current recommendations for CocaCola and Diageo, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CocaCola	0	3	15	0	2.83
Diageo	0	0	0	0	0.00

CocaCola presently has a consensus target price of $95.76, indicating a potential upside of 4.81%. Given CocaCola’s stronger consensus rating and higher probable upside, research analysts clearly believe CocaCola is more favorable than Diageo.

Earnings & Valuation

This table compares CocaCola and Diageo”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CocaCola	$47.94 billion	8.20	$13.11 billion	$3.33	27.44
Diageo	N/A	N/A	N/A	$0.78	30.47

CocaCola has higher revenue and earnings than Diageo. CocaCola is trading at a lower price-to-earnings ratio than Diageo, indicating that it is currently the more affordable of the two stocks.

Summary

CocaCola beats Diageo on 13 of the 14 factors compared between the two stocks.

About CocaCola

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 Diageo

Diageo plc, together with its subsidiaries, engages in the production, marketing, and sale of alcoholic beverages. It offers scotch, gin, vodka, rum, raki, liqueur, wine, tequila, Chinese white spirits, cachaça, and brandy, as well as beer, including cider and flavoured malt beverages. The company also provides Canadian, Irish, American, and Indian-Made Foreign Liquor whiskies, as well as ready to drink and non-alcoholic products. It provides its products primarily under the Johnnie Walker, Guinness, Tanqueray, Baileys, Smirnoff, Captain Morgan, Crown Royal, Don Julio, Cîroc, Buchanan's, Casamigos, J&B, and Ketel One brands. The company operates in the United States, the United Kingdom, Turkey, Australia, Korea, India, Greater China, Brazil, Mexico, South Africa, Nigeria, and internationally. Diageo plc was incorporated in 1886 and is headquartered in London, the United Kingdom.