As a product, customers generally prefer Coke. Wall Street. Meanwhile, Coke's stock is down 2%. For the latest business news and markets data, please visit CNN While the company's dividend yield isn't quite what Coke is offering, its payout is much healthier: Pepsi only used 66% of free cash flow over the past 12 months to pay its dividend. Coke claims it has 16 brands which bring in a billion in sales a year, or more. It also has a better split between its snacks and beverage businesses. Knowing that Coke is valued -- via its market capitalization -- at a 20% premium to Pepsi, here's how the two stack up. Both companies are defensive stocks that can play a key part in an investor’s portfolio in turbulent times to protect funds. Data source: SEC filings, Yahoo! When it comes to soft drinks, many people still prefer Coke. Coke trades for more than 21 times next year's forecasts too. Of the top 15 soft drinks on the BrandZ list, five are Coca-Cola offerings and six are PepsiCo products. All rights reserved. Berkshire would need to roughly double to reach a $1 trillion market cap. The subject is, however, more complicated than just brand valuation. Finance, E*Trade, Nasdaq.com. It currently sits at No. If you’ve purchased a home in the past 10 – 15 years, perhaps you’re familiar with the popular website Zillow.com. Business. MyWallSt staff currently hold long positions in companies mentioned above. Related: Roger Enrico, the former 'Cola King' at Pepsi has died. Buy These Stocks. How much a company is worth is typically represented by its market capitalization, or the current stock price multiplied by the number of shares outstanding. But focusing solely on past performance is like driving a car using only the rearview mirror. Pepsi briefly topped Coke's market value in the mid-late 2000s. The red can of cola is one of the most popular products in the world, in … Pepsi, on the other hand, has other drinks on its roster -- Gatorade, Aquafina, Mountain Dew, and Tropicana, to name a few -- as well as snacks like Quaker Oats, Doritos, and Fritos. While the companies are about the same in terms of the amount of cash coming in, there's a clear winner when it comes to cash vs. debt: Coke. I’m sure that this scenario sounds pretty familiar. Can Berkshire Hathaway Join the $1 Trillion Club? Here we have a clear winner. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Because inputs are relatively low-cost and the companies enjoy decent margins because of their brand values, there's lots of cash flowing in. There is 57% more happiness on Pepsi’s page than Coca Cola. With products flying off the shelves with the ongoing pandemic, Pepsi brand staples will likely see solid results despite ongoing supply chain strains. Meanwhile, noncarbonated Gatorade and Tropicana enjoyed gains, with brand values soaring 10% and 8%, respectively, during that same period. Each brand’s parent company has different challenges, and, first among these are the fall off in the soft drink market in general, particularly in the United States. Brokerage services are provided to clients of MyWallSt by DriveWealth LLC, an SEC registered broker-dealer and member FINRA/SIPC. That's not a question that we can answer with 100% certainty. Sales of Diet Pepsi and Diet Coke were each down nearly 7% from 2012. By comparison, PepsiCo returned 109%. And it looks like that trend won't end anytime soon. See you at the top! Market data powered by FactSet and Web Financial Group. Coca-Cola Net Worth. But which is the better buy at today's prices? To quote Bob Dylan, the times they are a changin'. But they've recently faced a more worrisome problem: declining revenue. Pepsi pops and there are food mergers in aisle 11! Pepsi has outperformed Coke for the past few years. This creates a whole new market for Pepsi which had previously been blocked from this sector by Rockstar. This will likely be an issue for both companies as long as this pandemic continues. Interestingly, consumers still seem to love salty snacks even though they may be drinking more water and energy drinks and less soda. Potential Risks & Rewards to Zillow’s New Home Flipping Business. Beverage Digest reports that soda sales in the U.S. dropped to their lowest level in 2013 since 1995, with case sales dropping 3% to 8.9 billion. So even though Buffett may have a thing for Cherry Coke and Coke's stock, he might want to follow the lead of the market and switch to Pepsi instead. Impressively, both Coca-Cola and Pepsi have secured spots on the BrandZ list since its 2006 inception. Worried About Another Market Crash? Cumulative Growth of a $10,000 Investment in Stock Advisor, Coca-Cola Vs. Pepsi: The Most Valuable Soft-Drink Brand of 2014 @themotleyfool #stocks $KO $PEP, These 15 Stocks Have Paid a Dividend for 125 (or More) Consecutive Years, 3 Things You'll Want to Know When Coca-Cola Announces Earnings, Forget Coca-Cola, Starbucks Is a Better Dividend Stock. Those who enter such times with lots of cash on hand have options -- buy back shares on the cheap, acquire the competition, or drive them out of business by lowering your prices to levels that they can't. Coke vs. Pepsi: net sentiment (ratio of positive to negative mentions) As you can see, Pepsi strikes back with a net sentiment of 30% vs. Coke's 15%. It looks like that may not last. To be honest, however, I'm not invested in either. It set Pepsi’s value at $17.9 billion, up 8%. However, PepsiCo's snack offerings, which include Quaker oatmeal, Stacy's pita chips, Sabra hummus, and many other products, which comprise 52% of company sales,  help spread these risks and lend it one key advantage over its major rival. Buy These Stocks. Coke vs Pepsi: Here's which stock would have made you richer if you invested $1,000 10 years ago. Coke and Pepsi each have a presence in these markets. As a product, customers generally prefer Coke. The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. Both cola giants face uphill battles with regards to declining soft drink consumption and legislative risks like soda taxes . Brian Stoffel has been a Fool since 2008, and a financial journalist for The Motley Fool since 2010. PepsiCo’s revenue was $66 billion last year. All Rights Reserved. She's worked as a financial advisor and planner for over a decade. As such, carbonated beverages are losing ground to energy beverages, juices and water. Coca-Cola has a market capitalization of $170 billion. A Warner Media Company. With 23 different products already under its umbrella that earn at least $1 billion each year, Pepsi is well-diversified in the snacks and beverages markets with access to 200 national markets. Mac 'n Cheetos hit the BK menu in June. Based solely on both companies’ revenue and profits from the last three years, Pepsi is worth around $100 billion, whereas Coke is worth just under $70 billion. He also mixes in risk-management strategies he's learned from Nassim Nicholas Taleb. It continues to be the market share leader. Indeed, there's something to be said for keeping a healthy stash of cash on hand. With more than 30 years until my retirement, and an overall trend away from drinking soda, I think there are better places for your money, like the 10 stocks we've listed below. The first stock that Andrew bought was Apple, reflecting his love for its products. Source: courtesy of The Coca-Cola Company. 75 on last year's list. And that follows an earnings decline in 2015 and another expected drop this year. Pepsi has flourished under Nooyi’s leadership. However, those values are rapidly eroding. So can Pepsi continue to profit from consumers' love of junk food? Debt-heavy players are in the opposite boat, forced to narrow their focus just to make ends meet. Wall Street. Net revenue between 2006 to 2017 has increased from $35 billion to $63.5 billion, a compound growth rate of 5.5 … But profits are expected to rise only 5% next year. Even though Frito-Lay accounts for just a little more than 20% of the company's overall sales, the division makes up more than 40% of Pepsi's operating profits. 88, down from No. views the valuations of the parent companies very differently. Pepsi posted organic sales up 2.1% YOY, carried by a boost in demand for its “guilt-free” products, such as unsweetened tea and baked chips, which now make up more than 45% of its net … Decent dividend yields are available, but there may not be too much capital appreciation in the near future. Coke vs. Pepsi: Business Models. However, Pepsi's almost $11.5 billion brand value fell 5% during that same period. It would make sense, then, to hope that management pays most of that cash out in the form of dividends. And Pepsi owns Tropicana, Aquafina and Gatorade. Data source: SEC filings, Yahoo! Meanwhile, the S&P 500 returned only 111% during that same period. Source: courtesy of The Coca-Cola CompanyIs the Coca-Cola Co. (NYSE:KO) worth more than PepsiCo Inc. (NYSE: PEP)? So there you have it: Pepsi is cheaper right now, but Coke's brand strength and cash hoard make it the better long-term choice in my opinion. But on Wall Street? It would appear so, at least based on brand value. About 58% of the company’s total revenue comes from North America, with the remaining 42% coming globally. On the same Forbes list, Pepsi comes in at 30th globally, with brand value of just over $18 billion. Coke vs. Pepsi: Business Models. Most stock quote data provided by BATS. Start Small: 6 Small Investment Ideas When You Have Less Than $500. Let's conquer your financial goals together...faster. The company certainly has a very strong balance sheet ($1.56 billion in cash reserves) and a competitive advantage to withstand significant drops in revenues in Q1 and Q2 of 2020. Pepsi has twice the radio of users engaged more than once. Nicole holds an MBA from the University of the Pacific and a chemical engineering degree from Purdue University. In order to combat sluggish sales, both Coca-Cola and PepsiCo have grown the breadth and depth of their portfolios with particular focus on noncarbonated drinks, which are expected to outpace carbonated. PepsiCo’s (NYSE: PEP) is almost $127 billion. Pepsi is less reliant on its North American operations, with its geographical diversification being preferred by many investors. Investors need to be a little careful though. Stock Advisor launched in February of 2002. At the right price, both of these companies are great additions to add … Its snacks division has the higher side of the revenue split (54%) than beverages (46%) in terms of revenue. The company is not going overly defensive during this period, recently announcing its acquisition of Rockstar Energy in a deal worth $3.85 billion. Copyright, Trademark and Patent Information. 27. It appears that way. On virtually every category, Pepsi is the cheaper choice. It gives us no indication as to how these companies might achieve success in the future. Of course, the U.S. represents less than a third of either company’s sales. At the right price, both of these companies are great additions to add stability to a portfolio. 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