Money and Finance
The bull market continues to rage along, but while its certainly not leaving bargains lying around, there are some quality companies that have not fully participated in the upside. For different reasons, there could be something resembling a fair price for Coke (emerging markets plus slowdown in US) and Pepsi (market ignoring Frito-Lay).
But which is the better buy today?
Without further ado, let's try to answer one of life's most pressing questions "Coke or Pepsi?" by the numbers.
Value
What price would you pay to own Coke or Pepsi?
Yield
This is too close to call, Coca Cola wins on its Balance Sheet, but Pepsi is is ahead on coverage, and so you can see why Pepsi was able to raise their dividend in the double digits. Tie.
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Money and Finance
Coke versus Pepsi
The bull market continues to rage along, but while its certainly not leaving bargains lying around, there are some quality companies that have not fully participated in the upside. For different reasons, there could be something resembling a fair price for Coke (emerging markets plus slowdown in US) and Pepsi (market ignoring Frito-Lay).
But which is the better buy today?
Without further ado, let's try to answer one of life's most pressing questions "Coke or Pepsi?" by the numbers.
Value
What price would you pay to own Coke or Pepsi?
| Coca Cola | Pepsi | |
| P/E | 19 | 18 |
| P/CF | 16 | 12 |
Advantage - Pepsi, cheaper both on earnings and cash flow basis.
Of course, price matters but so does quality.
Quality
| TTM | Coca Cola | Pepsi |
| Operating margins % | 22 | 15 |
| Net margins % | 19 | 10 |
| ROE % | 27 | 29 |
Advantage - Coca Cola. A step behind on ROE, but margins much more impressive
Yield
| Coca Cola | Pepsi | |
| Fwd Yield % | 3.3 | 2.9 |
| 1 yr Div growth % | 8.5 | 5.3 |
| 5 yr Div growth % | 8.5 | 6.3 |
Advantage goes to Coca Cola although its closer than it appears, because the Morningstar data that I am using does not have Pepsi's latest 15% dividend hike factored in.
Safety
| Coca Cola | Pepsi | |
| Debt/Equity | 0.4 | 1.0 |
| Payout ratio % | 57 | 52 |
| Cash flow coverage% | 1.68 | 1.97 |
This is too close to call, Coca Cola wins on its Balance Sheet, but Pepsi is is ahead on coverage, and so you can see why Pepsi was able to raise their dividend in the double digits. Tie.
Overall
Neither is a screaming buy, but they are not wildly expensive either. Quality at a reasonable price. Pepsi looks cheaper and potentially better able to grow its dividend. On the other hand Coca Cola wins on overall quality. Investors in either should have a fair shot at doubling their money in the next 5-10 years but Coca Cola looks like the better buy.
- The Long Case For The Coca-cola Company
The Coca-Cola Company (KO) will be announcing earnings on Tuesday, so what better time than the present to get an update on its current valuation. There's not much needed to be said about a company as great as Coca-Cola. It has the number...
- How Important Is Valuation?
There's several companies that I would like to own much larger stakes of. One of these companies is Coca-Cola (KO). They are a dividend champion with 50 consecutive years of dividend growth. That's quite a feat. However, given Coca-Cola's...
- Dividend Compass Match 9 - Coca Cola Vs Tim Horton's
The Dividend Compass Cup moves to the Elite Eight (Equity Eight?) round. The first match in this round is Coca Cola versus Tim Horton's. The Dividend Compass Cup rules are straightforward, we run the two quality, wide moat companies through the Dividend...
- Dividend Compass Cup October 2013 - Sweet Sixteen
Thanks to DC shenanigans, deeply immoral and irresponsible though they may be, there's starting to be some better prices on interesting companies. This seems like a good time to run Todd Wenning's Dividend Compass. Todd explains the tool here,...
- Recent: A Bunch Of Consumer Staples
I have some unexpected cost this month. I have to stretch $1,000 across August. August 3, 2015 Loyal3 automatic buys Starbucks $10.00 Kraft Heinz $17.00 Disney $10.00 Pepsi...