The Coca-Cola Company (KO)vs PepsiCo, Inc. (PEP)

Quick verdict

One number frames this pair: in the trailing twelve months, Coca-Cola turned $49.3bn of revenue into $14.5bn of operating profit, while PepsiCo needed $96.9bn of revenue — close to twice as much — to produce $14.4bn. Two businesses of similar profit power, built on utterly different amounts of activity. That gap explains almost everything else. Coca-Cola's concentrate-led model carries a 29.3% operating margin against PepsiCo's 14.8%, and the market pays for it: 27.7 times trailing earnings and 26.6 times EBITDA at the 4 September 2026 close, versus 18.0 and 13.3 for PepsiCo. Our factor scores hand Coca-Cola growth, quality and the balance sheet (3.5 points); PepsiCo takes valuation and income (2.5). Momentum is a tie. The choice is between paying a premium for margin and consistency, or accepting slower earnings for a 4.18% dividend yield and cheaper multiples.

At-a-glance comparison

Business model and revenue mix

Both sit in Consumer Defensive beverages, but they are not the same machine. Coca-Cola sells concentrates and finished drinks — Coca-Cola, Sprite, Fanta, water, juice and coffee — largely through independent bottling partners, which keeps capital and low-margin volume off its own books. Revenue of $49.3bn in the twelve months to April 2026 came with a 61.7% gross margin. PepsiCo is a dual-engine group: Frito-Lay and Quaker snacks alongside Pepsi, Gatorade and Tropicana, sold in more than 200 markets, with $96.9bn of revenue in the twelve months to June 2026 and a 54.0% gross margin. PepsiCo owns far more of its own manufacturing and distribution, which lifts revenue recognised but dilutes margin. Both report an operating-income line directly, so the margins quoted here are as filed. Scale in sales, then, is PepsiCo's; scale in profitability is Coca-Cola's.

Valuation

On every multiple in the data, PepsiCo is the cheaper share at the 4 September 2026 close, and it is not close. Its shares trade at 18.0 times trailing earnings against 27.7 for Coca-Cola, at 1.94 times sales against 7.69, and at 13.3 times EV/EBITDA against 26.6. Free cash flow yield tells the same story: 4.94% versus 3.32%. The price-to-sales gulf is partly structural rather than a judgement — Coca-Cola books only concentrate revenue, so each dollar of its sales carries far more profit, and a like-for-like sales multiple was never going to be like-for-like. The earnings and EBITDA gaps are harder to explain away. Coca-Cola's PEG of 2.4 suggests the premium is not fully covered by its growth rate either. Valuation goes to PepsiCo on the numbers as they stand.

Growth profile

Measured from fiscal 2022 to fiscal 2025, Coca-Cola compounded revenue at 3.69% a year and earnings per share at 11.55%; PepsiCo grew revenue at 2.83% and saw EPS shrink at 2.23% a year over the same span. Stretch the window to the fiscal 2020 base and Coca-Cola again leads, 7.75% revenue and 11.17% EPS CAGR against 5.94% and 3.22%. Worth flagging: the five-year figures start from fiscal 2020, a pandemic-affected year that hit Coca-Cola's on-premise and away-from-home volumes especially hard, so its 7.75% top-line rate is flattered by a depressed base. The three-year comparison, which avoids that distortion, still favours Coca-Cola on both lines. PepsiCo's negative three-year EPS trend is the sharper signal here — snacks volumes and input costs have not delivered per-share progress. Growth is Coca-Cola's.

Profitability and quality

The margin ladder is where Coca-Cola's model shows itself. Gross margin of 61.7% against PepsiCo's 54.0%, operating margin of 29.3% against 14.8%, and net margin of 27.8% against 10.78% — roughly two and a half times the bottom-line conversion. On $49.3bn of revenue Coca-Cola earned $13.7bn of net income; PepsiCo earned $10.5bn on nearly twice the sales. Return on equity looks higher at PepsiCo (51.4% versus 44.6%), but both equity bases are thin — $22.1bn and $33.6bn respectively against market capitalisations in the hundreds of billions — so ROE flatters leverage as much as it measures performance here. Return on invested capital is the better guide, and Coca-Cola leads on that at 17.99% against 15.78%. Free cash flow of $12.6bn versus $9.3bn completes the picture. Quality goes to Coca-Cola.

Balance-sheet risk

Neither balance sheet is conservative, but Coca-Cola's is the tidier of the two. It held $10.6bn of cash against $43.8bn of total debt as at 3 April 2026, giving net debt of 2.14 times EBITDA. PepsiCo held $10.3bn against $60.9bn of debt as at 13 June 2026, a heavier 2.82 times. Liquidity diverges too: Coca-Cola's current ratio of 1.36 covers near-term obligations, while PepsiCo's 0.93 means current liabilities exceed current assets — common for a cash-generative consumer group with supplier float, but a thinner cushion nonetheless. PepsiCo does win on interest coverage, at 12.73 times operating profit against Coca-Cola's 8.81, reflecting cheaper legacy borrowing rather than less debt. Weighing leverage and liquidity against that single coverage advantage, the balance-sheet factor goes to Coca-Cola.

Price performance and shareholder returns

Income investors face a clear trade. PepsiCo yields 4.18% at the 4 September 2026 price, paying $5.75 per share over the trailing year, against Coca-Cola's 2.34% from $2.06 per share — a gap of nearly two percentage points. PepsiCo also has the lower payout ratio at 74.7% versus 80.1%, so the larger yield is, on these figures, the better-covered one. Buybacks are modest at both: a 0.52% buyback yield at PepsiCo, 0.23% at Coca-Cola, meaning share-count reduction contributes little to either total return. Both payout ratios sit high enough that dividend growth will depend on earnings growth rather than further expansion of the payout — and that is where Coca-Cola's 11.55% three-year EPS CAGR contrasts with PepsiCo's negative trend. Today's income verdict is PepsiCo's; the durability question is less settled.

Which stock fits which investor

Value-focused buyers have an obvious lean: PepsiCo at 18.0 times earnings and 13.3 times EBITDA, with a 4.94% free cash flow yield, is priced as the discounted asset of the pair. Income seekers land in the same place, on a 4.18% dividend yield covered by a 74.7% payout. Quality and growth investors go the other way — Coca-Cola's 29.3% operating margin, 17.99% ROIC and 11.55% three-year EPS CAGR are the stronger fundamentals, though the 27.7 times multiple and 2.4 PEG mean that quality is fully recognised in the price. Our style tags read mature, high-quality for Coca-Cola and income, mature for PepsiCo. Momentum is a genuine tie between them. Overall the factor tally is 3.5 to 2.5 in Coca-Cola's favour, but the valuation gap keeps the debate live.

• Value: PEP
• Growth: KO
• Income: PEP
• Quality: KO

Frequently asked questions

Why does PepsiCo have nearly twice Coca-Cola's revenue but similar operating profit?

PepsiCo reported $96.9bn of revenue in the twelve months to June 2026 and $14.36bn of operating profit; Coca-Cola reported $49.3bn and $14.46bn in the twelve months to April 2026. The difference is structural — Coca-Cola sells concentrate through bottling partners and books only that revenue, giving a 29.3% operating margin against PepsiCo's 14.8%, while PepsiCo consolidates its own snacks manufacturing and distribution.

Which stock is cheaper, KO or PEP?

PepsiCo, on every available multiple at the 4 September 2026 close: 18.0 times trailing earnings versus 27.7, 13.3 times EV/EBITDA versus 26.6, and a 4.94% free cash flow yield versus 3.32%. The price-to-sales gap (1.94 versus 7.69) is exaggerated by the two companies' different revenue models rather than being a pure valuation signal.

Which pays the bigger dividend?

PepsiCo, at a 4.18% yield from $5.75 per share over the trailing twelve months, against Coca-Cola's 2.34% from $2.06. PepsiCo also has the lower payout ratio, 74.7% versus 80.1%, so the higher yield is better covered on current earnings.

Has PepsiCo's earnings per share been falling?

On these figures, EPS compounded at minus 2.23% a year from fiscal 2022 to fiscal 2025. Over the longer window from fiscal 2020 it grew at 3.22% a year. Coca-Cola grew EPS at 11.55% and 11.17% over the same two periods respectively.

Which has the stronger balance sheet?

Coca-Cola. Net debt stood at 2.14 times EBITDA as at 3 April 2026 with a current ratio of 1.36, against PepsiCo's 2.82 times and a current ratio of 0.93 as at 13 June 2026. PepsiCo's one advantage is interest coverage of 12.73 times operating profit versus Coca-Cola's 8.81.