Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

PepsiCo, Inc. (PEP), The Coca-Cola Company (KO) & Monster Beverage Corp (MNST) – Beverage Stocks: Know Your Risks, or Risk Your Future

Page 1 of 2

In the beverage industry, no one can stand up to PepsiCo, Inc. (NYSE:PEP) and The Coca-Cola Company (NYSE:KO) due to their massive production, distribution systems, and most importantly, the brand value attached with them. Monster Beverage Corp (NASDAQ:MNST) has successfully emerged as the world’s second-largest energy drink company (behind Red Bull). Buying the shares of these companies presents a predicament for investors as the companies are solid dividend payers. However, do they perform better than the market averages and other stocks available on the market?

PepsiCo, Inc. (NYSE:PEP)

Recent events

For The Coca-Cola Company (NYSE:KO), over the last five quarters, the company’s revenue has been stagnant, hovering at $11 billion quarterly. The position is getting worse for its shareholders as since Q2 2012, the EPS has been declining. However, Coca-Cola reported a better than expected EPS for the last quarter, and its current EPS is $1.97. Over the last 10 years, the company’s sales have been doubled at least. However, if the current crunch continues in the near future, any revenue growth will be stifled.

PepsiCo, Inc. (NYSE:PEP)’s stock has been up 27% over the past 12 months despite having to deal with weak North American sales like its primary competitor, The Coca-Cola Company (NYSE:KO). Similar to Coca-Cola, its EPS is also alarming about the company’s weakness as it faltered in the preceding two quarters. On revenue, PepsiCo has outperformed The Coca-Cola Company (NYSE:KO) as its quarterly sales are much higher on the back of renewed marketing efforts, including its first bottle redesign in 17 years. Its latest annual EPS stands at $3.92.

Energy drink producer Monster Beverage Corp (NASDAQ:MNST) reported disappointing first-quarter results with lower revenue growth and a failure of cost containment. Net income declined 17% when compared to the previous year. The earnings were largely short of the Zacks consensus estimate of $0.47 per share. Moreover, Monster Beverage has disappointed its investors in each of the last four quarters, with an average negative surprise of 11%.

Complaints against its energy beverages have been fairly elevated over the past years. San Francisco’s city attorney is now suing Monster Beverage Corp (NASDAQ:MNST) for marketing its energy drinks to children, saying the products provoke severe health risks.


Based on average stock market metrics, PepsiCo, Inc. (NYSE:PEP) and The Coca-Cola Company (NYSE:KO) look undervalued (good time to Buy), whereas Monster Beverage Corp (NASDAQ:MNST) is overvalued (good time to Sell).



Monster Beverage
Price/Earnings ttm 21.5 22.5 32.6
Price/Book 5.8 5.9 14.0
Net Income Growth (3 Yr Avg.) 1.3 9.7 17.7
Revenue Growth (3 Yr Avg.) 14.9 15.7 21.7
Dividend Yield
, %
2.71% 2.61%
Debt/Equity 1.0 0.4
Return on Equity 27.1 26.7 37.0
Current Price $83.
$42.98 $59.26

However, there is an inherent security about PepsiCo, Inc. (NYSE:PEP) and The Coca-Cola Company (NYSE:KO) regarding their performances in driving revenues, which will fuel their stock price. PepsiCo, however, has a high debt/equity ratio. That being said, the two stocks are very closely matched. Coca-Cola’s performance has been worse than PepsiCo’s, though it does seem to be clawing its way back up for now and provides a good opportunity to buy the stock.  Monster Beverage Corp (NASDAQ:MNST) has strong profitability margins that are among the strongest in a market comparison.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!