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Lawrence Rothman, CFA, The Motley Fool
Sun, Apr 6, 2025, 9:35 AM 4 min read
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Coca-Cola (NYSE: KO) and PepsiCo (NASDAQ: PEP) person a long-standing rivalry arsenic each has battled for the hearts, minds, and wallets of consumers. The heated contention has been aggravated implicit the past fewer decades arsenic they engaged successful the cola wars.
These venerable companies person go well-known household names, and they're giants successful the consumer packaged goods industry. However, it's important to look beyond past achievements and maturation to spot which institution offers amended concern potential.
Stock investigation whitethorn not person the amusement worth of the companies' commercials, but which one, Coca-Cola oregon PepsiCo, deserves your concern dollars?
Coca-Cola started selling its namesake marque successful 1886, and it remains a axenic beverage company. It has expanded beyond soda, however, and besides sells items similar water, coffee, tea, juice, and plant-based beverages.
It's pugnacious for companies to stay applicable and enactment successful concern for good implicit a century. Fortunately, Coca-Cola has been capable to proceed increasing revenue. Fourth-quarter revenue, adjusted to exclude the effects of acquisitions/divestitures and overseas currency translations, grew 14%.
Price/mix accounted for the bulk of the increase, 9 percent points. Importantly, though, the equilibrium came from accrued volume. Coca-Cola's Q4 operating income grew an awesome 22%. That beardown summation is noteworthy since it came arsenic consumers person been weary aft precocious ostentation and they've go reluctant to acquisition nonessentials.
Coca-Cola's shares person rewarded investors, with the terms gaining astir 18% implicit the past twelvemonth done April 4. The S&P 500 scale mislaid 1.4% during this period.
Coca-Cola's banal does commercialized astatine a somewhat higher valuation than the S&P 500 average. The erstwhile has a trailing price-to-earnings (P/E) ratio of 28 compared to the latter's 27.
PepsiCo, meanwhile, has expanded beyond soda. It besides offers nutrient items similar tortilla chips, murphy chips, cereal, and granola bars nether brands similar Cheetos, Doritos, Life, and Quaker.
While the institution has been palmy for a agelong time, gross has been sluggish lately. Adjusted fourth-quarter gross accrued 2.1%, divided betwixt measurement and terms increases. Management was capable to power expenses, and adjusted net per stock accrued 14%.
PepsiCo's 2024 gross besides was up 2% for the year. However, this was solely owed to terms increases, which added 4 percent points portion measurement subtracted 2 percent points. Management doesn't expect overmuch acceleration this year, forecasting a low-single-digit percent summation successful revenue.
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