PepsiCo vs. Coca-Cola: Which Stock Has the Edge?

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.

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. 

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.

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. 

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.

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.

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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This article originally published on Zacks Investment Research (zacks.com).

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