The battle of Pepsi and Coke is not limited to taste and personal preference. There is also consideration between the two for investment purposes. As a representative of an accounting firm, it is a personal responsibility to provide a stock market analysis to present to the client as part of the professional consultation. The financial statements of both companies will be utilized for this recommendation as well. Both company’s stock valuation, dividends, and retained earnings will be analyzed in order to determine the impact on an investor’s decision. Finally, based upon the findings, a recommendation will be made to the client as to whether Pepsi or Coke is the better option for their investment needs.
Both Pepsi and Coke are solid investment options based on their long-standing performance. They have established themselves in their market and continued their performance based on necessary change year after year. ”Coke controls 42% of the total carbonated soft drink market, compared with Pepsi’s 30%, according to Beverage Digest” (Street, 2014). As the carbonated soft drink demands change, however this could change drastically. Both companies have answered the demands of their consumers and introduced new products to remain competitive and increase revenue.
Investing in Pepsico determines a breakout of $83 and a one-year target of $87. On the other hand, Coke has reported at or around $39. The charts below show that Pepsico would be a solid risk and reward for investors, and coke would be a good option for a short position.
Y Chart has reported Coke-cola’s stock value at 41.72 0.09(0.22%). The increase in value is a common practice for the company and their stocks are continually increasing at a moderate rate. The other findings show the stocks Open 41.60, High 41.75, Low 41.47, Market cap of 182.98B, P/E ration (ttm) 22.3, and Dividend yield .92%. Coke-cola has shown a positive presence in the stock market which offers a significant amount of stability for investors. This weighs heavily on the decision to invest in such a company.
Coke-cola retained earnings are 63.19B for June 30, 2014 (Y Chart, 2014). This is a very solid reporting as well. “Coca-Cola (NYSE: KO) made the “Dividend Channel S.A.F.E. 25″ list because of these qualities: S. Solid return — hefty yield and strong DividendRank characteristics; A. Accelerating amount — consistent dividend increases over time; F. Flawless history — never a missed or lowered dividend; E. Enduring — at least two decades of dividend payments” (Coke, 2014). The stability shows a significant favor for Coke-cola, because of the long-term potential outcome.
Y Chart has Pespi Stock validation at 92.49 (0.10%). This is a decrease, however the stock price is double that of Coke. The other findings show an Open at 92.73, High of 92.91, Low of 92.01, Market cap of 139.36B P/E ratio (ttm) 20.87, and a Dividend yield of 2.83%.
“As previously disclosed on February 13, 2014, the Board of Directors of PepsiCo, Inc. (NYSE: PEP) today declared a 15 percent increase in the company’s annual dividend, from an annual rate of $2.27 to $2.62 per share on PepsiCo common stock. It is the company’s 42nd consecutive annual dividend increase” (Pepsi Co, 2014). Pepsi has shown a continual increase as well, based on their business practices and investment strategies. Pepsico is also a strong company, even though it may not be favored by consumers.
The stockholder’s dividends for Pepsico has been favorable as well. “Over the past ten years PepsiCo has returned more than $60 billion to shareholders in the form of dividends and share repurchases. The company expects to return $8.7 billion to shareholders in the form of dividends and share repurchases in 2014, a 35 percent increase from 2013” (Pepsi Co, 2014). As the last years reporting, the increase in dividends and share repurchases was significantly higher than that of the prior year, up 35 percent. This speaks highly of Pepsi as well and the stability of investments. Even though the results are favorable, Coke is still strongly favored by the consumers in a company comparison. This factor weighs heavily for advising a client for investment purposes.
Based upon the findings, it would be best suited for the long-term return of the investor to invest in Coke-cola. The stock price of Pepsico Inc. are far higher, other factors show their growth and increase is not as stable as that of Coke. The retained earnings, dividends, and stock validation all show a significant strength in both companies, however Coke-cola has a much more stable basis for investment. The stock market value may be lower, whoever all other consideration weigh heavily in favor of Coke. With an increase in stock price on a regular basis, it shows that investments will be favorable based upon these terms. Therefore the recommendation as a representative would be to invest in Coke.