Comparing Coca Cola and Pepsi

Comparing Coca Cola and Pepsi

Introduction

This paper compares stock and financial performance for Coke and PEP companies for purposes of making a sound investment decisions. It begins by giving a general overview of the two beverage companies in terms of formation, leadership, products, financial performance among others. It later compares trends in stock prices for three year period and provides an investment decision based on these trends. Financial analysis is also discussed to assess the trends in profitability, balance sheet activities and cash flow for purposes of aiding investment decisions.

Company overview

Pepsi Cola was originally started by Caleb Bradham in 1898 as the fast branded soft drink in the world. In 1965 Pepsi-cola merged with Frito-Lay to form PepsiCo. The Company has grown to become the second largest beverage and food companies in the world after Coca Cola. Brands include carbonated soft drinks, ready to drink coffee and tea, snacks, chips, pan cake, water brand, juice among others. The company brand is available in over 200 countries across the globe with sales revenue in excess of $92 billion in 2011. It is headquartered in Purchase, New York. PepsiCo has had a successful financial growth, with a return on investment of 26 percent in 2006 which is way above the industry average. The Company brand is appealing to generation Y, synonymous with entertainment, music and sports. The company is dedicated to ethics and social responsibility. Headed by board of directors, who have diversified skills, experience and knowledge. Under the board are several Committees consisting individuals from the board of directors. It has over 71, 000 workers in manufacturing, distribution and marketing across the globe. PepsiCo has a competitive and sustainable advantage in the industry because of big brands, innovation and differentiation capabilities and powerful marketing (PepsiCo, 2011).

Coca Cola Company

The company was born in Atlanta USA by Dr. John Pemberton on May 1886 as a soda fountain beverage, and later sold as a patent to Atlanta Pharmacy, Jacob’s pharmacy. In 1891, Candler acquired complete ownership of Coca cola for $2,300. Today, the company has over 1.6 billion servings every day, quenching the thirst customers in more than 200 countries. It is seemingly the leading beverage firm in the world owning four of world’s most top five selling brands, with indisputable global brand name. It has diverse product portfolio, heavily dependent on carbonated soft drinks such as diet coke, sprite and coca cola zero. It has diversified into juice, ready to drink teas, bottled waters and sports drinks. It has embraced innovation and product differentiation. It has the strongest return on equity in the industry, approximately 31 percent, compared to 14 percent for the industry,