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Coca-Cola reported earnings and beat expectations for profits and revenue.
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Coca-Cola has stronger operating margins than Pepsi.
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Coke’s revenues have been declining since 2014 whereas Pepsi’s revenues have largely held steady.
Coca-Cola (KO) reported earnings this morning and beat Wall Street expectations to the tune of earnings at 58 cents a share against expectations of 55 cents and revenue of $8.25 billion against expectations of $8.17 billion — fueling a gain of 2.52 percent on the day.
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As consumers turn away from sugary drinks, both Coke and Pepsi (PEP) are in the process of expanding their brand portfolios and finding new ways to reach a more health-conscious audience — it was strong sales on diet sodas that helped Coke beat street predictions this most-recent quarter. But will it be Coke or Pepsi stock that will ultimately pay off the faith of its investors in the end?
Here’s a look at the two biggest soft drink companies and which might make the best investment.
Coca-Cola vs. PepsiCo Stock Comparison
Here’s a basic comparison of Coca-Cola and Pepsi:
| KO | PEP | |
| Share Price | $47.63 | $113.77 |
| Market Cap | $202.6 billion | $160.6 billion |
| 2017 Revenue | $35.4 billion | $63.5 billion |
| 2017 Profits | $1.2 billion | $4.9 billion |
| 2017 Revenue Growth | -15.41% | 1.16% |
| 2017 Profit Growth | -80.88% | -23.26% |
| GOBankingRates’ Net Worth Evaluation | $64.4 billion | $51.5 billion |
| P/E Ratio | 85.36 | 32.82 |
| P/S Ratio | 6.11 | 2.48 |
| Stock Gain/Loss Last Month | 3.12% | 1.76% |
| Stock Gain/Loss Last Year | 7.49% | 7.10% |
| All market data accurate as of market close on Oct. 30, 2018. | ||
Why You Might Pick Coca-Cola:
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Coca-Cola’s PB ratio of 11.06 suggests it’s selling at a better price for its tangible assets than Pepsi with its PB ratio of 15.62.
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Coca-Cola has significantly more cash on hand with $19.35 billion to Pepsi’s $13.9 billion.
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Coca-Cola boasts a much stronger operating margin of 29.58 percent to Pepsi’s 16.29 percent.
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Why You Might Pick PEP:
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Pepsi investors are getting a much better price based on each company’s revenue, with a PS ratio of 2.48 to Coke’s hefty 6.11.
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Pepsi has the much better return on equity at 41.99 percent to Coke’s 10.61 percent.
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Although Pepsi has posted stagnant revenue growth in recent years, it’s a significant improvement on Coca-Cola, which has seen revenues decline each year since 2014 for a total of 24.6 percent.
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The Final Word on KO vs. PEP
Coke is an industry stalwart with strong operating margins and plenty of resources, but anyone concerned about the $10 billion-plus in revenue that’s disappeared over the last four years might consider investing in Pepsi and its nearly-identical dividend yield of a little over 3.5 percent.