Coca-Cola Outshines PepsiCo in Key Metrics
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5d ago
0mins
Source: NASDAQ.COM
- Dividend Growth Comparison: While PepsiCo's dividend has increased by 39% since 2021, outpacing Coca-Cola's 21%, Coca-Cola's lower dividend yield of 2.8% compared to PepsiCo's 3.8% makes PepsiCo appear more attractive for dividend-focused investors.
- Profitability Discrepancy: Coca-Cola reported a 30% growth in adjusted earnings last quarter, contrasting with an 11% decline for PepsiCo, indicating a significant advantage for Coca-Cola in core operational profitability, which may attract more investor interest.
- Margin Comparison: Coca-Cola's average profit margin stands at 27.3%, significantly above the beverage industry's average of 13.4%, while PepsiCo lags at 7.8%, highlighting Coca-Cola's superior pricing power and operational efficiency.
- Dividend Payout Ratio Warning: PepsiCo's payout ratio is at 105%, indicating it spends more on dividends than it earns in net income, and if profit margins continue to decline, it may be forced to cut dividends in the coming years, jeopardizing its Dividend King status.
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Analyst Views on KO
Wall Street analysts forecast KO stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for KO is 79.33 USD with a low forecast of 71.00 USD and a high forecast of 85.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
14 Analyst Rating
13 Buy
1 Hold
0 Sell
Strong Buy
Current: 78.510
Low
71.00
Averages
79.33
High
85.00
Current: 78.510
Low
71.00
Averages
79.33
High
85.00
About KO
The Coca-Cola Company is a beverage company. The Company's segments include Europe, Middle East and Africa; Latin America; North America; Asia Pacific; Global Ventures; and Bottling Investments. It sells multiple brands across several beverage categories worldwide. Its portfolio of sparkling soft drink brands includes Coca-Cola, Sprite and Fanta. Its water, sports, coffee and tea brands include Dasani, smartwater, vitaminwater, Topo Chico, BODYARMOR, Powerade, Costa, Georgia, Fuze Tea, Gold Peak and Ayataka. Its juice, value-added dairy and plant-based beverage brands include Minute Maid, Simply, innocent, Del Valle, fairlife and AdeS. It operates in two lines of business: concentrate operations and finished product operations. Its concentrate operations sell beverage concentrates, syrups, including fountain syrups, and certain finished beverages to authorized bottling operations. Its finished product operations sell sparkling soft drinks and a variety of other finished beverages.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Coca-Cola Rises for Seven Days, IPO Plans Draw Attention
- Strong Stock Performance: Coca-Cola (NYSE:KO) closed 0.80% higher at $79.14 on Friday, marking its seventh consecutive day of gains, demonstrating relative strength amid broader market declines, particularly as the S&P 500 fell 2.58% during the same period.
- IPO Plans Attract Attention: The company is exploring an initial public offering for its Indian bottling unit, Hindustan Coca-Cola Beverages, targeting proceeds of about $1 billion and a valuation nearing $10 billion, which is seen as a strategic move to unlock value from its bottling operations.
- Divergent Analyst Ratings: According to Seeking Alpha's Quant rating, Coca-Cola holds a 'Hold' rating with a score of 3.29, indicating strong profitability but pressures on growth and valuation, while Wall Street analysts generally rate the stock as a Buy, with 19 analysts giving it a Buy or higher rating.
- Cautious Market Outlook: Despite Coca-Cola's resilient business model, Agar Capital maintains a Buy rating with a $90 price target, highlighting risks such as a strong dollar, pressure on low-income consumers, and an upcoming CEO transition that could impact future performance.
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Investment Opportunities in Consumer Staples: The XLP ETF offers diversified exposure to the Consumer Staples sector, featuring major companies like Walmart and Coca-Cola, and is seen as a solid investment choice due to its reliable dividends and consistent demand for essential goods.
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- Beverage Stability: Coca-Cola (KO) offers a forward-looking dividend yield of 2.7% and boasts a 63-year history of dividend increases, demonstrating strong brand loyalty and marketing prowess, ensuring a reliable source of passive income for investors.
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- Coca-Cola's Steady Income: Coca-Cola (NYSE: KO) offers a forward-looking dividend yield of 2.7%, backed by 63 years of annual dividend increases, showcasing its strong brand loyalty and marketing prowess, solidifying its status as a top dividend payer.
- Investor Considerations: While Verizon is seen as a stable dividend stock, the Motley Fool analyst team has identified 10 stocks that are currently viewed as more valuable investments, potentially yielding significant returns in the coming years, prompting investors to choose wisely.
See More
Coca-Cola Rises for Seven Days, IPO Plans Draw Attention
- Strong Stock Performance: Coca-Cola (NYSE:KO) closed 0.80% higher at $79.14 on Friday, marking its seventh consecutive day of gains, demonstrating relative strength amid broader market declines, particularly as the S&P 500 fell 2.58% during the same period.
- IPO Plans Attract Attention: The company is exploring an initial public offering for its Indian bottling unit, Hindustan Coca-Cola Beverages, targeting proceeds of about $1 billion and a valuation nearing $10 billion, which is seen as a strategic move to unlock value from its bottling operations.
- Divergent Analyst Ratings: According to Seeking Alpha's Quant rating, Coca-Cola holds a 'Hold' rating with a score of 3.29, indicating strong profitability but pressures on growth and valuation, while Wall Street analysts generally rate the stock as a Buy, with 19 analysts giving it a Buy or higher rating.
- Cautious Market Outlook: Despite Coca-Cola's resilient business model, Agar Capital maintains a Buy rating with a $90 price target, highlighting risks such as a strong dollar, pressure on low-income consumers, and an upcoming CEO transition that could impact future performance.
See More
Key Earnings Reports and Economic Outlook This Week
- DuPont Earnings Expectations: DuPont is expected to report earnings of $0.43 per share and revenue of $1.69 billion for Q4 2025, with analysts noting ongoing pressure in short-cycle businesses, while slight improvements in the automotive sector may influence investor sentiment.
- Cisco's AI Focus: Cisco anticipates earnings of $1.02 per share and revenue of $15.1 billion for Q2 FY2026, with CEO highlighting a major multi-year campus networking refresh, making AI infrastructure demand a critical growth driver.
- Importance of Employment Report: The January employment report is expected to show an addition of 80,000 nonfarm payrolls and an unchanged unemployment rate of 4.4%, directly impacting private consumption and U.S. GDP, making it crucial for investors to monitor.
- Consumer Price Index Insights: The January CPI is projected to increase by 2.5% year-over-year, with core CPI rising by 2.6%, providing essential inflation details despite not being the Fed's preferred measure, particularly regarding persistent shelter cost inflation.
See More
Key Focus Areas This Week: Jobs, Consumer Prices, Coca-Cola, CVS, Ford, McDonald's, and More
- Market Performance: The Dow Jones Industrial Average rose by 2.5% and closed above 50,000 for the first time.
- Nasdaq Struggles: In contrast, the Nasdaq Composite ended the week down 1.8%, despite a strong rally on Friday.
See More
Consumer Staples Significantly Surpassing Market Performance—Here’s the Reason
U.S. Stock Market Decline: The U.S. stock market has experienced a downturn, with the S&P 500 ETF dropping over 2% recently, primarily driven by declines in the software and technology sectors, alongside fears stemming from a recent cryptocurrency crash.
Consumer Staples Sector Resilience: In contrast to the broader market, the Consumer Staples sector has thrived, with the Consumer Staples Select Sector SPDR Fund surging nearly 6% last week and showing an impressive 11.89% year-to-date increase, highlighting its defensive nature during market volatility.
Investment Opportunities in Consumer Staples: The XLP ETF offers diversified exposure to the Consumer Staples sector, featuring major companies like Walmart and Coca-Cola, and is seen as a solid investment choice due to its reliable dividends and consistent demand for essential goods.
Market Sentiment and Analyst Recommendations: Analysts are bullish on the Consumer Staples sector, with a consensus buy rating, as institutional inflows have significantly increased, indicating strong investor interest and confidence in the sector's stability amidst broader market uncertainties.
See More
Dividend Stocks Gain Appeal Amid Tech Stock Meltdown
- Telecom Appeal: Verizon Communications (VZ) has achieved only 2% year-over-year growth in a highly competitive U.S. mobile market, yet its forward-looking dividend yield of 6.1% attracts income-seeking investors, highlighting the stock's stability and appeal amid market volatility.
- Pharmaceutical Strategy: Merck (MRK) is strategically preparing for the 2028 patent expiration of its Keytruda drug by acquiring companies like Prometheus Biosciences and Verona Pharma, expecting to generate $70 billion in new revenue by the mid-2030s, showcasing its market expansion capabilities.
- Beverage Stability: Coca-Cola (KO) offers a forward-looking dividend yield of 2.7% and boasts a 63-year history of dividend increases, demonstrating strong brand loyalty and marketing prowess, ensuring a reliable source of passive income for investors.
- Market Trend Shift: Amid the decline of tech stocks, investors are increasingly turning to blue-chip stocks, particularly high-dividend stocks within the Dow Jones Industrial Average, reflecting a preference for stable income and a reassessment of risk in the current market environment.
See More
Saturated Telecom Market Limits Verizon's Growth Potential
- Telecom Market Saturation: The U.S. mobile phone market is highly saturated, with Verizon Communications (NYSE: VZ) reporting only 2% year-over-year revenue growth last quarter, indicating limited net growth potential, although its forward-looking dividend yield of 6.1% remains attractive.
- Pharmaceutical Positioning: Pharmaceutical giant Merck (NYSE: MRK) is preparing for the 2028 patent expiration of Keytruda, having made significant acquisitions like the $10.8 billion purchase of Prometheus Biosciences in 2023, expecting these moves to drive $70 billion in new revenue by the mid-2030s.
- Coca-Cola's Steady Income: Coca-Cola (NYSE: KO) offers a forward-looking dividend yield of 2.7%, backed by 63 years of annual dividend increases, showcasing its strong brand loyalty and marketing prowess, solidifying its status as a top dividend payer.
- Investor Considerations: While Verizon is seen as a stable dividend stock, the Motley Fool analyst team has identified 10 stocks that are currently viewed as more valuable investments, potentially yielding significant returns in the coming years, prompting investors to choose wisely.
See More
