Core Insights - The enduring rivalry between PepsiCo Inc. and The Coca-Cola Company highlights their competition for market share and strategic dominance in the global beverage industry [1][2] PepsiCo (PEP) Summary - PepsiCo's investment case is supported by its dominant market position, holding or gaining carbonated soft drink share in about two-thirds of its top international markets [3][11] - In Q3 2025, PepsiCo's international beverage business achieved 6% organic revenue growth, with non-sugar variants leading in key markets like the U.K. [4] - The company's diversified business model, which includes a significant snacks portfolio, enhances its competitive edge and pricing power [5] - Management is focusing on faster-growing beverage segments, such as zero sugar and functional hydration, with brands like Pepsi Zero Sugar and Mountain Dew gaining market share [6] - PepsiCo reported nearly 3% growth in net revenues in Q3, driven by North America and international growth, despite facing supply chain and tariff-related cost pressures [7] - The company's fundamentals, market leadership, and disciplined cost management position it well for sustained cash flows and long-term shareholder returns [8] Coca-Cola (KO) Summary - Coca-Cola's investment thesis is based on its unmatched scale and durable market leadership, having gained overall value share for 18 consecutive quarters across all geographic segments [9][10] - The company boasts a deep portfolio with 30 billion-dollar brands, reinforcing its dominance and pricing power in the beverage industry [10] - Coca-Cola's strategy includes a "total beverage" approach, allowing it to adapt to shifting consumer preferences across demographics [12] - In Q3 2025, Coca-Cola delivered 6% organic revenue growth and expanded operating margins, achieving EPS growth despite currency headwinds [14] - Strong free cash flow generation and a conservative balance sheet provide Coca-Cola with the flexibility to reinvest in growth while returning capital to shareholders [14] Price Performance & Valuation - Over the past year, PepsiCo shares declined by 5.9%, while Coca-Cola shares increased by 11.2%, indicating Coca-Cola's stronger market performance [15] - From a valuation perspective, PepsiCo trades at a lower forward P/E of 16.84X compared to Coca-Cola's 21.74X, making it more attractively priced [16] - Despite its lower valuation, PepsiCo's diversity and innovation engine make it a compelling long-term investment, while Coca-Cola's premium valuation reflects its strong brand equity and growth potential [19] Consensus Estimates - PepsiCo's EPS estimate for 2025 has increased by 0.2%, with projected revenues of $93.5 billion, reflecting a 1.8% year-over-year increase [20] - Coca-Cola's 2025 revenues are expected to rise by 2.7% to $48.3 billion, with EPS projected to grow by 3.5% to $2.98 per share [20] Competitive Edge - Coca-Cola currently holds a near-term advantage due to its stronger momentum and solid growth prospects, supported by its pure-play beverage focus and consistent market share gains [23] - PepsiCo offers an attractive counterbalance with its low valuation and favorable earnings recovery outlook, appealing to investors seeking value [24]