Coca-Cola vs. PepsiCo: valuation data favors Pepsi

Coca-Cola is the better business. PepsiCo is the cheaper stock. On valuation alone, the data favors Pepsi.

The Setup

Coca-Cola Co (KO) closed at $95.83 on Nov 2, 2026 (3:59 PM EST). PepsiCo Inc (PEP) closed at $140.42. Pre-market on Nov 3, KO was $95.42 (4:54 AM EST) and PEP was $140.35 (4:48 AM EST). Both are thin early prints.

Both companies sell fizzy drinks to the same customers. The market prices them very differently.

Slide 1: The Price Tag

An investor pays about $28 for each $1 of Coke’s earnings. The same $1 of Pepsi’s earnings costs about $17.60. Pepsi’s EV/EBITDA is also half of Coke’s. EV/EBITDA is a price tag for the whole business, debt included, relative to operating profit.

Slide 2: What You Get Paid

Pepsi pays almost twice Coke’s dividend yield. Its free cash flow yield (cash left after investment, relative to price) is also higher. This is a bigger cash return for each dollar invested.

Slide 3: Fair Value Check

• KO: Fair value is $81.38, so the stock trades about 15.1% above the model’s estimate.
• PEP: Fair value is $163.24, which implies about 16.2% upside.

These figures are as of Nov 3, 2026 at 4:53 AM EST. They are model outputs, not guarantees.

Slide 4: Quality and Growth

• Margins favor Coke. Its FY2025 gross margin was 61.6%, against 54.5% for Pepsi. Coke sells mostly concentrate, so it keeps more of each sales dollar.
• Growth is steady but slow. Coke’s revenue grew from $38.66B (FY2021) to $47.94B (FY2025). Pepsi’s grew from $79.47B to $93.92B. Both were nearly flat in 2024.
• Pepsi uses more leverage. Its debt/equity is 232.7%, against 111.4% for Coke. Pepsi’s higher ROE of 52.3% (Coke: 42.6%) is partly a product of that debt.

Bull vs. Bear

PepsiCo

• Bull: A low multiple, a 4.2% yield and fair-value upside give a cushion if growth disappoints.
• Bear: Heavy debt and thinner margins may cap how far the valuation can recover.

Coca-Cola

• Bull: It has best-in-class margins and a lighter balance sheet.
• Bear: At 28x earnings and a PEG of 2.3, much of the good news is already priced in.

The Takeaway

Coke’s premium pays for quality and stability, and it leaves little room for error. Pepsi offers a bigger discount, a higher yield and more modeled upside, in exchange for more debt and lower margins. Valuation points to Pepsi. A buyer who puts quality first may still accept Coke’s price.

Ratios are dated Aug 31 to Nov 3, 2026, depending on the metric. This comparison reflects a data snapshot, not a forecast, and recent news or earnings catalysts have not been reviewed.

Historical data is limited to 10 years on Pro+ plan.