Consumer staples compared: Coca-Cola, PepsiCo and the price of predictability

Consumer staples are the things people keep buying when money is tight: drinks, snacks, groceries, soap. Their appeal to investors is the opposite of a growth stock's. Sales barely move with the economy, and that steadiness produces the cash for large, reliable dividends. We cover two of the best-known staples companies, Coca-Cola and PepsiCo, and they show that even within one aisle of the supermarket, two businesses can be built in very different ways. Figures are trailing twelve months to each company's latest filing in our data — 3 April 2026 for Coca-Cola, a quarter behind its latest report, and 5 September 2026 for PepsiCo, so the two windows sit a few months apart — with valuations at the 14 October 2026 close.

The numbers side by side

Coca-Cola is valued at $394.9bn and PepsiCo at $176.2bn, even though PepsiCo's revenue is roughly twice as large. The rest of this study is about why.

Slow growth is the point

Neither company grows quickly. From 2022 to 2025, Coca-Cola's revenue rose 3.69% a year and PepsiCo's 2.83%. Over five years the rates look better — 7.75% and 5.94% — partly because 2020, the starting point, was a weak year for Coca-Cola, when the pandemic closed the restaurants, cinemas and stadiums where many of its drinks are sold.

Earnings per share tell a sharper story. Coca-Cola's grew 11.55% a year over the three years, far faster than its sales, which means each dollar of revenue became more profitable. PepsiCo's fell 2.23% a year while its revenue rose, so the opposite happened: costs took a larger share of each sale. For a staples company, whose investors are buying steadiness, a gap like that matters more than the headline growth rate. Our guide to revenue versus EPS growth explains how to read the two together.

Two ways to sell a drink

The difference starts with what each company actually sells. Coca-Cola mostly sells concentrates and syrups to independent bottling partners around the world, which make the finished drinks, fill the bottles and run the delivery trucks. PepsiCo makes and delivers much of its product itself, and more than half of its sales come from food rather than drinks: Frito-Lay crisps and Quaker oats alongside Pepsi and Gatorade, sold in more than 200 markets.

That choice shows up at every level of the income statement. Coca-Cola keeps 61.74% of revenue after the cost of what it sells, 29.34% after its operating costs and 27.8% as net profit. PepsiCo keeps 54.17%, 15.32% and 11.09%. The result is that PepsiCo, with roughly twice the revenue, earns less: $10.9bn of net income against Coca-Cola's $13.7bn. Our study of operating margin by business model puts these margins next to those of chipmakers, carmakers and drugmakers.

Same return on capital, opposite routes

Here is the surprise in the table. Despite an operating margin nearly twice PepsiCo's, Coca-Cola earns almost exactly the same return on invested capital: 17.99% against 17.21%.

Return on capital is the product of two things: how much profit each sale earns, and how many sales each dollar of capital produces. Coca-Cola wins on the first. PepsiCo wins on the second, generating almost twice as much revenue from each dollar of capital. Part of the reason is that Coca-Cola's capital base is larger than its light model suggests, because its balance sheet carries acquired brands and stakes in bottlers. Two very different businesses arrive at the same place.

Return on equity points the wrong way here. PepsiCo's 52.09% beats Coca-Cola's 44.64%, but both are flattered by small equity bases: after years of large dividends and buybacks, more of each company's capital is debt than equity, so profits are measured against a thin slice of it. Return on invested capital, which counts debt as well as equity, is the fairer comparison — see ROE versus ROIC.

The price of predictability

Investors pay much more for Coca-Cola on every measure. It trades at 28.86 times earnings, 8.01 times sales and 11.74 times book value, with an enterprise value of 27.6 times EBITDA; PepsiCo at 16.26, 1.79, 7.9 and 11.95. Coca-Cola's free cash flow yield is 3.18% against PepsiCo's 5.94%.

Whatever the premium pays for, it is not speed. Coca-Cola's PEG ratio — its P/E divided by its three-year EPS growth — is 2.5, a high figure for a company growing earnings at 11.55% a year. PepsiCo has no PEG in our data at all, because its EPS growth is negative and a PEG computed from it would mean nothing. Whether either price is right depends on whether Coca-Cola's margins hold and whether PepsiCo's earnings recover, and neither is something a trailing figure can tell you.

What shareholders get back

For many staples investors, the dividend is the reason to own the shares. PepsiCo pays $5.80 a share, a yield of 4.49%; Coca-Cola pays $2.06, a yield of 2.24%. Buybacks are small at both — 0.22% of market value at Coca-Cola and 0.56% at PepsiCo — because the dividend already takes most of the cash.

Both dividends are covered by free cash flow, with some room to spare: each company's free cash flow yield is above its dividend yield. That is the test that matters for a payout of this size, because a dividend paid out of borrowing cannot last. Our guide to dividends versus buybacks explains how the two ways of returning cash differ.

Debt as part of the model

Staples companies borrow more comfortably than most, because lenders trust cash flows that hardly change from year to year. Coca-Cola carries $43.81bn of debt and $10.57bn of cash: net debt of 2.14 times EBITDA, interest covered 8.81 times. PepsiCo carries $58.28bn of debt and $10.68bn of cash: net debt of 2.54 times EBITDA, interest covered 13.61 times. PepsiCo's current ratio of 0.94 means its short-term liabilities exceed its short-term assets, a level that is not unusual for large consumer-goods companies with steady cash inflows; Coca-Cola's is 1.36. For how these measures are calculated and where they mislead, see debt and balance-sheet risk.

How the head-to-head comes out

On our six-factor score, Coca-Cola vs PepsiCo comes out 3.5 to 2.5 in Coca-Cola's favour. Coca-Cola wins growth, quality and the balance sheet; PepsiCo wins valuation and income; momentum is not scored, as on every page. Read it as a description of the figures: Coca-Cola leads on more measures of business strength, PepsiCo on price and payout. It is not a recommendation to buy either. The six-factor score explained uses this very pair as its worked example.

What the numbers cannot show

Three things that move these companies are invisible in a trailing twelve-month table. First, price versus volume: in recent years much of the sector's revenue growth has come from raising prices rather than selling more, and the revenue line in our data cannot separate the two. Second, changing habits: investors are debating what appetite-suppressing obesity medicines, the same class of drugs behind Eli Lilly's growth in our healthcare study, could mean for demand for snacks and soft drinks. Third, currency: both companies earn a large share of their sales outside the United States, so a strong dollar reduces their reported revenue without a single fewer can being sold.