PepsiCo shares have fallen more than 19% over the past two years while Coca-Cola rallied nearly 31%, opening a wide valuation gap between the two beverage giants. Coca-Cola now trades at a trailing price-to-earnings ratio of just over 26, while PepsiCo sits at a little more than 18, and their forward dividend yields stand at 2.4% and 4.2% respectively. The divergence reflects recent operating trends: Coca-Cola posted 6% organic revenue growth and an expanding core operating margin of 34.9% in its latest quarter, whereas PepsiCo managed only 2.4% organic growth and saw its core operating margin slip 40 basis points to 16.8%. The margin difference stems partly from PepsiCo handling most of its own bottling, a lower-margin model compared with Coca-Cola’s reliance on third-party bottlers. The article suggests the market may be undervaluing PepsiCo and overvaluing Coca-Cola, noting that such valuation dynamics have historically ebbed and flowed for both companies.
PepsiCo IncArticle highlights PepsiCo's undervaluation with lower P/E and higher dividend yield, suggesting potential upside.
The Coca-Cola CompanyArticle suggests Coca-Cola may be overvalued relative to PepsiCo, with higher P/E and lower dividend yield.
Coca-Cola Europacific Partners PLC