PepsiCo (PEP) vs. Coca-Cola (KO): What's the Stronger Near-Term Buy?

When thinking of competitors, Coca-Cola KO and PepsiCo PEP undoubtedly come to mind. Both have established themselves over decades of successful operations while also sporting shareholder-friendly natures.These defensive-natured stocks are great for balancing a risk profile, as they can generate consistent sales across many economic environments.Still, there has been a big performance disparity between the duo in 2025, with KO shares widely outperforming. This is illustrated in the chart below.Image Source: Zacks Investment ResearchDespite the performance disparity, both companies recently reported better-than-expected quarterly results, with each seeing post-earnings gains.It raises a valid question – which one looks better positioned to continue their momentum?PepsiCo EarningsFavorable results in PEP’s release lead analysts to raise their EPS expectations across the board, making it a favorable Zacks Rank #2 (Buy). The company posted a double-beat concerning our consensus headline expectations, with sales growing 2.7% year-over-year alongside a -0.8% decline in adjusted EPS.Image Source: Zacks Investment ResearchImportantly, PEP affirmed its previous FY25 guidance, clearing a massive hurdle. The company enjoyed improved momentum across its North America Beverages, with international momentum also remaining firm. Rising EPS revisions post-earnings can be partly attributed to a stronger USD EPS outlook on improved foreign exchange rates.The +2.7% year-over-year sales growth rate is the strongest we’ve seen from the titan since the September 2023 period. Weakening growth rates were largely to blame for shares’ less-than-ideal performance over the last year and a half.  Please note that the chart below tracks YoY sales growth rates, not actual sales figures.Image Source: Zacks Investment ResearchCoca-Cola EarningsCoca-Cola posted mixed results concerning our headline expectations, exceeding the Zacks Consensus EPS estimate by 5% but falling short of sales expectations by a marginal 0.1%. Unlike PEP, analysts haven’t increased their EPS expectations post-earnings, with KO remaining a Zacks Rank #3 (Hold).Downward revisions for its next period hit the tape following the release, though.Image Source: Zacks Investment ResearchKO posted stronger top and bottom line growth relative to PEP, with sales up 5.1% year-over-year alongside a 6.5% climb in adjusted EPS. Coca-Cola has been facing the same weakening sales growth rates, as shown below, but the +5.1% print does reflect a notable turnaround relative to the last two periods.Please note that the chart below tracks YoY sales growth rates, not actual sales figures.Image Source: Zacks Investment ResearchSales growth was aided by a 6% increase in price/mix, with the company largely successful in passing its costs on to consumers through higher prices without hampering demand.Which Looks Better Positioned?From a valuation perspective, PEP shares currently trade at an 18.1X forward 12-month earnings multiple, well below the five-year median of 23.1X. KO shares are noticeably more expensive, trading at a 22.4X forward 12-month earnings multiple, not too far off the 23.1X five-year median.Image Source: Zacks Investment ResearchConcerning near-term performance, PepsiCo's PEP much-improved EPS outlook also gives it the edge over Coca-Cola KO shares, with its favorable Zacks Rank #2 (Buy) rating doing some heavy lifting.Both companies have largely been able to produce solid results in the face of a challenging environment, but the momentum within PEP appears clearer at present, underpinned by a more attractive valuation picture and a bullishly shifting EPS outlook.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CocaCola Company (The) (KO): Free Stock Analysis Report PepsiCo, Inc. (PEP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks