Coca-Cola Vs Pepsi Stock: Which is the Better Buy for 2025?

Core View - Coca-Cola and PepsiCo are historically popular among hedge funds and institutional investors, with both companies owned by major investors like Vanguard Group and BlackRock [1] - The analysis compares Coca-Cola and PepsiCo as potential investments heading into 2025, focusing on financial metrics, growth outlook, and valuation [1] Low Beta Ratios - Both Coca-Cola and PepsiCo exhibit low beta ratios, indicating lower volatility compared to the S&P 500 Index (base value of 1.0) [2] - PepsiCo has a slightly lower beta score of 0.54 compared to Coca-Cola's 0.61, suggesting marginally better defensive safety [2] Growth & Outlook - PepsiCo's growth is bolstered by its presence in the consumer snacking market, with total sales expected to rise 1% in FY24 and 3% in FY25 to $94.8 billion [3] - PepsiCo's annual earnings are projected to increase 7% in FY24 and 5% in FY25 to $8.59 per share [3] - Coca-Cola's revenue is projected to grow 1% in FY24 and 4% in FY25 to $48.02 billion, with EPS growth of 6% in FY24 and 3% in FY25 to $2.96 per share [6] Performance & Valuation Comparison - Over the past year, Coca-Cola outperformed PepsiCo with a total return of +4% (including dividends), compared to PepsiCo's -11%, though both lagged the S&P 500's +27% [8] - Over the last five years, both companies significantly underperformed the broader market's total return of +105% [8] - Coca-Cola and PepsiCo trade at forward P/E multiples of 20.5X and 17X, respectively, both below the benchmark's level [9] - PepsiCo trades at a more attractive valuation of less than 2X sales, compared to Coca-Cola's 5.6X [9] Dividend Comparison - PepsiCo offers a higher annual dividend yield of 3.71%, compared to Coca-Cola's 3.19%, both significantly above the S&P 500's average of 1.2% [11] Takeaway - Both Coca-Cola and PepsiCo currently hold a Zacks Rank 3 (Hold), with PepsiCo showing advantages in several financial metrics, while Coca-Cola remains viable for long-term investors [13] - Investors may consider other options in the consumer staples sector but should monitor these companies amid potential market volatility in 2025 [13]