PEP vs. CELH: Which Beverage Stock Is the Better Bet Now?

Core Insights - The beverage industry is witnessing a shift towards healthier, performance-oriented drinks, with PepsiCo and Celsius Holdings emerging as key players to monitor [1] Company Overview - PepsiCo has a market capitalization of approximately $200 billion and offers a diverse range of products, including soft drinks, sports hydration, teas, coffees, and snacks, providing significant breadth in the beverage and food categories [2] - Celsius Holdings, valued at around $10.4 billion, is rapidly growing in the performance-energy sector, driven by its clean-label, fitness-oriented CELSIUS product line that appeals to health-conscious consumers [2] Growth and Performance - PepsiCo's growth is characterized by consistent top-line gains, bolstered by improving beverage sales and stabilizing trends in convenient foods, with international operations showing mid-single-digit organic growth for over four years [4][7] - Celsius Holdings reported a remarkable 173% year-over-year revenue increase in Q3 2025, driven by strong performance across its brands, capturing over 20% of the U.S. energy drink market [8] Strategic Partnerships - Celsius's growth is significantly supported by its partnership with PepsiCo, which enhances its distribution and visibility in the market [9][10] Financial Estimates - The Zacks Consensus Estimate for PepsiCo's current fiscal-year sales indicates a 1.8% year-over-year increase, while Celsius Holdings is projected to achieve approximately 80% growth in both sales and EPS for the current fiscal year [13][16] Stock Performance - Over the past year, PepsiCo's shares have decreased by 9.9%, while Celsius Holdings has seen a 46.4% increase, reflecting investor confidence in Celsius's growth potential in the energy drink category [19] Valuation Metrics - PepsiCo's forward P/E ratio is 17.12, indicating it is fairly valued for a stable business, while Celsius Holdings has a forward P/E of 27.08, suggesting it is trading at a relative discount compared to its recent growth-driven valuation [20][22] Investment Outlook - Both companies present unique strengths: Celsius with its rapid growth and PepsiCo with its established portfolio and reliable execution. However, PepsiCo is viewed as the better investment option currently due to its stability and predictable growth trajectory [23][24]