Financial Contrast: Anheuser-Busch InBev SA/NV (NYSE:BUD) and PepsiCo (NASDAQ:PEP)

PepsiCo (NASDAQ:PEP) and Anheuser-Busch InBev SA/NV (NYSE:BUD) 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 earnings, risk, analyst recommendations, institutional ownership, dividends, valuation and profitability.

Insider and Institutional Ownership

73.1% of PepsiCo shares are held by institutional investors. Comparatively, 5.5% of Anheuser-Busch InBev SA/NV shares are held by institutional investors. 0.1% of PepsiCo shares are held by insiders. Comparatively, 4.5% of Anheuser-Busch InBev SA/NV shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

PepsiCo pays an annual dividend of $5.92 per share and has a dividend yield of 4.6%. Anheuser-Busch InBev SA/NV pays an annual dividend of $1.41 per share and has a dividend yield of 1.8%. PepsiCo pays out 77.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Anheuser-Busch InBev SA/NV pays out 29.9% of its earnings in the form of a dividend. PepsiCo has raised its dividend for 54 consecutive years. PepsiCo is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current recommendations for PepsiCo and Anheuser-Busch InBev SA/NV, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PepsiCo	1	12	7	0	2.30
Anheuser-Busch InBev SA/NV	0	5	11	0	2.69

PepsiCo presently has a consensus price target of $157.90, indicating a potential upside of 21.78%. Anheuser-Busch InBev SA/NV has a consensus price target of $91.08, indicating a potential upside of 17.36%. Given PepsiCo’s higher probable upside, analysts clearly believe PepsiCo is more favorable than Anheuser-Busch InBev SA/NV.

Profitability

This table compares PepsiCo and Anheuser-Busch InBev SA/NV’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PepsiCo	10.78%	54.63%	10.49%
Anheuser-Busch InBev SA/NV	14.90%	16.42%	7.47%

Volatility & Risk

PepsiCo has a beta of 0.35, meaning that its share price is 65% less volatile than the S&P 500. Comparatively, Anheuser-Busch InBev SA/NV has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.

Earnings and Valuation

This table compares PepsiCo and Anheuser-Busch InBev SA/NV”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PepsiCo	$93.92 billion	1.88	$8.24 billion	$7.63	16.99
Anheuser-Busch InBev SA/NV	$62.62 billion	2.50	$6.84 billion	$4.72	16.44

PepsiCo has higher revenue and earnings than Anheuser-Busch InBev SA/NV. Anheuser-Busch InBev SA/NV is trading at a lower price-to-earnings ratio than PepsiCo, indicating that it is currently the more affordable of the two stocks.

Summary

PepsiCo beats Anheuser-Busch InBev SA/NV on 10 of the 17 factors compared between the two stocks.

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.

About Anheuser-Busch InBev SA/NV

Anheuser-Busch InBev SA/NV produces, distributes, exports, markets, and sells beer and beverages. It offers a portfolio of approximately 500 beer brands, which primarily include Budweiser, Corona, and Stella Artois; Beck's, Hoegaarden, Leffe, and Michelob Ultra; and Aguila, Antarctica, Bud Light, Brahma, Cass, Castle, Castle Lite, Cristal, Harbin, Jupiler, Modelo Especial, Quilmes, Victoria, Sedrin, and Skol brands. The company operates in North America, Middle America, South America, Europe, the Middle East, Africa, and the Asia Pacific. The company was founded in 1366 and is headquartered in Leuven, Belgium.