Friday, 27 June 2014

Coca Cola VS Pepsi?



I would personally choose Coke anyday. 
Not cuz it's Buffet's favourite of the 2.. but cuz it's not a sugary-saccharine reminder of fake movie-lines.


1.       PepsiCo might look like a better investment than Coca-Cola, with higher dividends of $2.62 than Coca-Cola's $1.22 a share. To note: Their yields match at 2.9%.




2.       52-week price range of Pepsi Co is wider $77-$90 than Coca Cola’s 36-42 (Double the difference). This wide difference shows us the volatility and elasticity of PepsiCo and how it can easily reverse the bullish trend.

3.       Unlike Coca-Cola, which has a heavier presence in global markets (Emerging Markets like China and India means it is well diversified), PepsiCo is overly exposed to the US market. PepsiCo although is better brand diversified, as it can claim a better portfolio than Coca-Cola.
Widely known Lay’s and Doritos, non carbonated drink like Lipton Tea, Gatorade and Quaker Oats.

4.       Considering Pepsi Co’s high exposure in Russia and having received its maximum growth from Russia & Brazil, it is a risky pick at the present situation of the chill between U.S.-Russian ties; therefore it could create new uncertainty.

5.       Coke outsources it’s business unlike Pepsi Co. Pepsi Co, therefore has some negative correlation to commodity prices, which is, if commodity prices rise, then Pepsi suffers.

6.       Coca Cola knows how to adapt, It made a diet version of it’s classic and has been consistent. Instead of moving from Carbonated to Healthy Drinks to Snacks.

7.       Coca-Cola is making the right move by partnering with Green Mountain. In addition, Coca-Cola recently increased its stake in Green Mountain to 16%.

8.       Next five years, Coca-Cola's earnings are expected to grow at a CAGR of 6.70%, which is better than the growth of 6.05% seen in the last five years.


COCA COLA
PEPSI
Market Cap (intraday)5:               
184.73B
134.34B
Forward P/E (fye Dec 31, 2015)
18.76
18.12
PEG Ratio (5 yr expected)
3
2.71
Profitability
Profit Margin
18.22%
10.35%
Operating Margin
23.93%
15.22%
Management Effectiveness
Return on Assets
7.72%
8.27%
Return on Equity
25.78%
30.55%
DEBT


Total Debt/Equity (mrq):
116.77
140

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