The Coca-Cola Company (KO) and PepsiCo, Inc. (PEP): A win-win situation

Page 1 of 2

The Coca-Cola Company (KO)The similarities between The Coca-Cola Company (NYSE: KO) and PepsiCo, Inc. (NYSE:PEP) go well beyond their identical-tasting colas. From their pricing strategies to their scramble for market shares, these two continue to fight an intriguing battle over decades and decades. In the wake of recent earnings releases by The Coca-Cola Company (NYSE:KO) and PepsiCo, let us take a closer look at what these two giants have in store for investors.

Both companies have similar price-to-earnings ratios of just over 19, and both have their stock valued at approximately 16 times their forward earnings (The Coca-Cola Company (NYSE:KO) just above 16, and PepsiCo just below). And what’s more, both companies offer solid prospects for long-term investors.

A big swig of Coca-Cola

For the fourth quarter, The Coca-Cola Company (NYSE:KO) reported net income of $1.87 billion, or $0.41 per share, up from $1.66 billion, or $0.36 per share last year. Revenue increased by 4% to $11.46 billion.

Analysts were expecting earnings of around $0.44 per share on revenue of $11.53 billion. Global volumes were up 3% vis-à-vis analyst expectations of around 3.9%. So the results were a mixed bag as far as analyst expectations were concerned, but in line with the company’s growth targets. There was some weakness noted in the stock price following the earnings release, but this should not concern the long-term investors.

There were in fact a few very strong pointers that we noted, most importantly the solid results in emerging markets like Thailand, India, and Russia. The Coca-Cola Company (NYSE:KO) achieved volume growth of 22%, 16%, and 8%, respectively, for the full year. China grew 4% affected by bad weather, slowing economy, and a later Chinese new year.

The company will continue to focus on these markets, where consumption of Coca Cola brands is less than 150 eight-ounce servings annually. In the US, the consumption is around 403 such servings per year. Coke is also trying to augment its business of non-carbonated drinks, and it stands to gain significantly from its unparalleled distribution network.

A taste-test for PepsiCo

Meanwhile, PepsiCo reported solid fourth-quarter results, beating analyst estimates. The company earned $1.66 billion, or $1.06 per share, against $1.42 billion or $0.89 per share a year ago. Revenue was $19.95 billion, down 1% from last year. However, organic revenue was up 5%, driven by 9% growth in developing and emerging markets. The analysts were expecting earnings of $1.05 per share on revenue of $19.7 billion. The company’s earnings beat led to a rise in Pepsi’s share price.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!