PepsiCo faces challenges and stock decline, while Coca-Cola sees revenue growth and stock increase.

PepsiCo’s stock (NASDAQ:PEP) has faced a 10% decline this year, compared to Coca-Cola’s (NYSE:KO) 16% increase. Issues in North American operations, including slower demand for Frito-Lay snacks and a Quaker Foods recall, have led to a downward revision in full-year guidance, impacting investor confidence.

Coca-Cola has seen a 7% average annual revenue growth from 2021 to 2024, surpassing PepsiCo’s 5% growth. Strong performance in North and Latin America drove Coca-Cola’s revenue increase, fueled by effective pricing strategies. PepsiCo experienced revenue growth but faced challenges from the Quaker Oats recall crisis.

Coca-Cola’s net margin declined from 25.3% to 22.6% from 2021 to 2024, while PepsiCo’s margin increased from 9.6% to 10.4%. Coca-Cola’s financial risk profile is slightly better than PepsiCo’s, with lower debt-to-equity and higher cash-to-assets ratios.

Coca-Cola’s stock has climbed 40% since early 2021, while PepsiCo’s has only seen a 4% increase. Both underperformed compared to the S&P 500’s 65% surge. While KO showed more consistent gains, PEP saw fluctuations in annual returns, impacting their overall performance relative to the market.

PepsiCo (PEP) offers a more attractive investment opportunity than Coca-Cola (KO) due to its lower valuation. PEP’s stock trades at 17 times trailing earnings, below its historical average, while KO’s stock is trading higher than its own average. Despite recent challenges, PEP’s anticipated recovery and discounted valuation position it favorably against KO.

Investors seeking to reduce volatility can explore alternative strategies like the Trefis RV or High Quality portfolio, known for outperforming benchmarks. These options offer diversification and potential for solid returns, mitigating risks associated with individual stocks like KO and PEP.

Read more at Nasdaq: How Does PepsiCo Compare With Coca-Cola?