- Ramon Laguarta will replace Pepsi CEO Indra Nooyi on Oct. 3, 2018.
- Pepsi increased its revenue under Nooyi, though Coke was paying out more dividends as of April 2017.
- Both companies might be affected by a decline in soda consumption.
Pepsi and Coke have both been providing sugary sweet beverages to consumers for over a century while drawing battle lines at the soda fountain. But the Coke vs. Pepsi debate doesn’t just apply to the supermarket — the brands are also rivals in the stock market. Coke stock — and the beverage itself — might be a favorite of investing wunderkind Warren Buffett — Berkshire Hathaway held a 9.4 percent stake in the Coca-Cola Company, The Motley Fool reported in March 2017 — but Pepsi is the bigger company.
PepsiCo announced on Aug. 6, 2018 that Pepsi CEO Indra Nooyi will step down from her position after 24 years with the company, and after being its first woman CEO. She will be replaced by Ramon Laguarta, who has overseen global operations and public policy for the company. How will this shake-up affect Pepsi stock, and what does that mean for its rival? Read on to get an overview of what investing in either company might mean for your portfolio.
|What Pepsi and Coke Are Worth|
|Share Price, 52-Week Range||$95.94-$122.51||$125.08-$244.80|
|Market Cap, 52-Week Range||$136B-$173.7B||$893.2M-$1.7B|
|All information on 52-week range is accurate as of Aug. 6, 2018.|
|About Pepsi and Coke|
|CEO||Indra Nooyi||James Quincey|
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Coke vs. Pepsi Market Caps: $893.2M-$1.7B and $136B-$173.7B, Respectively
One of the most reliable gauges for what a company is really worth is market capitalization, or market cap for short. The market cap is the value of all of the company’s stock combined, giving you a sense of what value investors are placing on the company based on the price it is trading at.
Coca-Cola Net Worth and Pepsi Net Worth: $2.3B and $70.3B, Respectively
Although market cap gives you a clear sense of what the market values a company at, it’s based entirely on market sentiment — essentially reflecting the ever-changing opinions of investors — and it changes from hour to hour. The GOBankingRates Evaluation, however, calculates a company’s net worth based solely on measurable figures like assets and revenue. It’s a more conservative valuation taking into account only full-year profits and revenue from the last three years and the company’s assets and debts.
Based solely on both companies’ revenue and profits from the last three years, Pepsi is worth around $70 billion, whereas Coke is worth just over $2 billion.
Pepsi has flourished under Nooyi’s leadership. Net revenue between 2006 to 2017 has increased from $35 billion to $63.5 billion, a compound growth rate of 5.5 percent per year. For shareholders, this means dividends have almost tripled from $1.16 to $3.17 between 2006 and 2017. Nooyi was also responsible for Pepsi’s foray into the world of snacks, which has helped expand the company’s portfolio. PepsiCo stock price has been trending upward since 2014, despite a sharp drop in mid-2018 that has since been correcting itself.
Coca-Cola enjoys the backing of Warren Buffett, and has enjoyed a compound annual growth of 3.7 percent over the last decade. Coke appears to be less of a diverse investment than Pepsi, which also has the snack market covered under Frito-Lay. This might present a problem for the beverage giant, as soda consumption fell between 2003 and 2014, according to a November 2017 press release from the Harvard T.H. Chan School of Public Health. On the other hand, Coke was paying out more dividends than Pepsi, The Motley Fool reported in April 2017. Also, while the decline of pop will likely affect both companies and Coca-Cola stock, Pepsi is generating more revenue money-wise. Pepsi profits actually decreased by about $1.47 billion between 2016 and 2017. With Coke poised to raise its soda prices, however, time will tell if personal health beats out market expectations.
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Methodology: The GOBankingRates Evaluation assesses a company’s net worth based on the company’s total assets, total liabilities, and revenue and net income from the last three years. Base value is established by subtracting total liabilities from total assets from the company’s last full fiscal year. Income value is established by taking the average of the revenue from the last three full fiscal years, 10 times the average of the net profits from the last three full fiscal years, and then calculating the average of those two figures. The final GOBankingRates Evaluation number is the sum of the base value and the income value.