PepsiCo vs. Coca-Cola: What's the Better Stock?

When thinking of Consumer Staples titans, Coca-Cola KO and PepsiCo PEP undoubtedly jump to the forefront of many minds. Both have established themselves over decades of successful operations, also rewarding shareholders nicely along the way.These defensive-natured stocks are great for balancing a risk profile, as they possess the advantageous ability to generate consistent sales in the face of many economic situations. And they also carry a track record of increasing quarterly dividend payouts, another major perk of targeting these stocks.Still, there has been a big performance disparity between the duo over the last year, with KO shares widely outperforming. This is illustrated in the chart below.Image Source: Zacks Investment ResearchIt raises a valid question – what’s the better buy currently? Let’s take a closer look at each.Breaking Down ResultsPepsiCo posted mixed results in its latest quarterly release concerning headline figures, exceeding the Zacks Consensus EPS estimate but falling short of sales expectations. FY24 organic sales climbed 2% year-over-year (compared to 9.5% in 2023), whereas adjusted EPS of $8.16 moved 9% higher.  North America results came in a bit soft, with full-year 2024 Frito-Lay sales falling 0.5% year-over-year. It reflects quite a growth cooldown from the year-ago period when PEP posted 9% year-over-year North America Frito-Lay sales growth.The cooldown here in Frito-Lay sales can be attributed to a big slowdown in the salty and savory snack categories, primarily attributed to a consumer that’s shifted preferences towards dining out/experiences. Quaker Foods North America saw its organic sales also decline by 14%, primarily attributed to a recall of its oatmeal.PepsiCo Beverages North America did see a 1.0% increase in organic sales, reflecting the lone highlight from the region. Despite the softness of the results, PEP expects North America results to gradually improve throughout 2025, which could be a big tailwind given its recent underperformance.Despite the softness in North America, its international results came in strong, with organic sales climbing 6% in FY24. Below is a chart illustrating the company’s sales on a quarterly basis, which primarily reflects a level of stagnation.Image Source: Zacks Investment ResearchAnalysts have taken a bearish stance on the company’s outlook following the release, landing the stock into an unfavorable Zacks Rank #4 (Sell). The cloudy revisions picture here alludes to further share pressure in the near-term. Keep in mind that North America represents the bulk of the company’s sales.Image Source: Zacks Investment ResearchConcerning headline figures in KO’s latest release, the company exceeded both consensus EPS and sales expectations handily, reflecting growth rates of 12% and 6%, respectively. Like PEP, Coca-Cola also reported its full-year results, which we will focus on.Notably, Coca-Cola gained market share in total nonalcoholic ready-to-drink beverages in North America, with its overall price/mix also increasing by an impressive 11% throughout its FY24. Unit case volume in North America also grew 1% year-over-year, driven by several of its popular beverage offerings.The discrepancy in North America results relative to PEP is quite notable, with KO’s lower exposure to the snacks market providing a nice shield. KO’s international results were also strong throughout FY24, gaining market share in Latin America, Europe, Middle East, & Africa.ValuationMoving onto the valuation picture, KO shares presently trade at a 21.8X forward 12-month earnings multiple, a 27% premium relative to PEP’s 17.2X. It actually reflects the steepest premium we’ve seen over the past five years, with investors favoring KO’s outlook.PEP’s current year EPS is expected to climb 2% in its FY25, whereas KO is currently forecasted to see a 6% move higher.Image Source: Zacks Investment ResearchPutting Everything TogetherConsumer staples titans PepsiCo PEP and Coca-Cola KO both recently revealed their full-year and Q4 2024 results, with the reaction to KO’s results positive and the same for PEP negative.PEP’s faced soft results within its North America segment as consumers shift towards dining out/experiences over cheaper snacks, a big deal given how much of its sales are generated from the region. Though PEP forecasted a recovery in the region throughout FY25, KO’s North America results showed little reasons to worry.In addition, PEP’s current negative EPS outlook alludes to further near-term share pressure. We’d like to see positive earnings estimate revisions begin hitting the tape, which would reflect a big tailwind given the recent negative share performance.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CocaCola Company (The) (KO): Free Stock Analysis Report PepsiCo, Inc. (PEP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks