PepsiCo PEP and Coca-Cola KO are two consumer staples heavyweights, both offering highly defensive businesses alongside long histories of rewarding shareholders.
Coca-Cola is almost entirely beverage-focused, leaning on its massive brand portfolio and global bottling network. PepsiCo pairs beverages with a large convenient-foods business, providing broader diversification but also greater exposure to pressured North American snacking demand. Uneven consumer spending, input-cost inflation, and currency swings remain key factors for both.
PepsiCo Breakdown
PepsiCo’s latest quarterly results were solid, with sales climbing 6.4% YoY to $24.18 billion and core EPS rising 4% to $2.20. Both came in above the Zacks Consensus, with sales beating expectations by 1.3% and earnings delivering a modest 0.5% surprise.
The underlying results were a little mixed. Global convenient foods and beverage organic volumes increased 3% and 2%, respectively, while international organic revenue climbed a strong 7%. PepsiCo Beverages North America sales rose 7% YoY to $7.24 billion, though organic volume declined 4%. PepsiCo Foods North America sales fell 2% to $6.37 billion, reflecting continued pressure in its key domestic market.
PEP’s sales momentum has stalled modestly over the last three years, as shown below.
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Growth expectations remain steady, with current Zacks Consensus estimates suggesting 5.3% higher earnings in FY26, followed by 4.9% earnings growth in FY27. Consensus annual EPS revisions for PEP have largely displayed a back and forth nature over the past year, as we can see below.
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Coca-Cola Breakdown
Coca-Cola’s latest results reflected stronger momentum, with Q2 sales climbing 7% YoY to $13.38 billion and comparable EPS jumping 11% to $0.97. Sales and earnings both exceeded Zacks Consensus estimates by 2.5% and 5.4%, respectively.
Importantly, the underlying operating metrics were also strong. Global unit case volume rose 5%, with Trademark Coca-Cola volume up 5% and Coca-Cola Zero Sugar surging 16%. North America unit case volume increased 3%, while price/mix rose 4%. Comparable operating margin also expanded to 35.6% from 34.7% in the year-ago period.
As shown below, KO’s top-line momentum has been much stronger relative to PEP over the last three years.
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The growth outlook for KO is also stronger, with Zacks Consensus estimates suggesting 9.7% earnings growth in 2026 and another 7% in FY27. Annual revisions have remained on a more bullish trajectory for KO over the last year, as shown below.
Image Source: Zacks Investment Research
Share Performance and Valuation
KO shares have displayed wide outperformance relative to PEP in 2026, gaining more than 27% compared to PEP’s 2.7% YTD decline. Quarterly results from KO have also regularly fueled stronger post-earnings reactions, with PEP’s releases not being met with nearly as much positivity.
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PEP shares trade at a rather heavy discount relative to KO, with the current 15.9X forward 12-month earnings multiple well below KO’s 25.6X and also beneath its five-year median. That said, KO’s stronger underlying volume trends, margin expansion, and higher expected earnings growth reflect a more attractive operating picture, easing concerns about the valuation premium.
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Bottom Line
PepsiCo PEP is clearly the value play, with its diversified portfolio and discounted valuation appealing.
But Coca-Cola KO currently has the stronger fundamental setup. Better volume trends, expanding margins, stronger earnings growth expectations, and its Zacks Rank #2 (Buy) outweigh the stock’s richer valuation, giving KO the edge over PEP, which is a Zacks Rank #3 (Hold).
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CocaCola Company (The) (KO): Free Stock Analysis Report
PepsiCo, Inc. (PEP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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