PEPSI VS COCA COLA
One of the most ironic things about Pepsi is the fact that Coca Cola had a chance to buy Pepsi twice in the 1930s, but both times refused. Now the two are bitter rivals. Pepsi gained a great deal of popularity during the Great Depression, especially after 1936, when it undercut Coke by selling Pepsi for the same price, but in a larger bottle, getting price crunched consumers to switch to the rivaling soda.
Today, Pepsi is still one of the most popular drinks in the United States, and the world, continuing its rivalry with Coke by holding taste tests to this day in certain markets. Pepsi also prides itself in having a wide variety of different drinks such as Diet Pepsi, Diet Cherry Pepsi, and Cherry Pepsi. In the past few years, it has also introduced Pepsi Throwback, the original formula of Pepsi that uses cane sugar instead of the modern Pepsi’s high fructose corn syrup. With this new flavor, it is once again taking over the market, having higher numbers than Coca-Cola.
So, how do PepsiCo and Coca-Cola match up?
- Pepsi: Growing, profitable company; overpriced stock. PepsiCo revenues spiked 33.8% to $62.4 billion in the last year, and its net income rose 6.3% to $6.3 billion — yielding a wide 10.2% profit margin. But its price/earnings-to-growth ratio is an overvalued 2.09 (where 1.0 is considered fairly valued) with a P/E of 15.7 on earnings forecast to grow 7.5% to $4.74 in 2012.
- Coke: Growing, profitable company; slightly overpriced stock.
Coca-Cola revenues are up 13.3% in the last year to $32.2 billion, and
its net income spiked 73% to $12.5 billion — earning a whopping 29.8%
net profit margin. And its PEG is a reasonable 1.28 on a P/E of 12.5
with earnings forecast to grow 9.8% to 4.23 in 2012.