Which rival is the better buy today?

$Coca-Cola(KO)$$Pepsi(PEP)$

Here are the key takeaways:

1. KO mainly produces beverages (CocaCola,MinuteMaid, Schweppes) whereas PEP produces food and beverages (Cheetos, Lays, Gatorade).

2. Valuation:

KO ia fairly valued at 55-60USD with 6% Discount rate and 3% Growth rate (In line with Inflation)

PEP is undervalued at 190-200USD with 6% discount rate and 3% Growth rate.

3. Financial health

Both companie have HUGE debt. 

KO D/E ratio is 173.4% while PEP D/E ratio is 258%. However, both companies are able to pay their bill. Debt coverage for PEP is 27% of operating cash flow and 29.9% for KO. 

4. Share buyback

Both companies have good buyback programmes. PEP has repurchased shares 8% of outstanding shares in the past 7 years while KO has only repurchased 3% in past 7 years. 

5. Earnings Growth:

KO earnings has grown 12% in the past 5 years whereas PEP has only grown 6%.

Bottom line:

Both companies are good and dominant in their field. In my opinion, I think PEPSICO is a better buy currently. They have a strong buyback programme, diversified product range and is currently tradinf at a 20% discount. 

What do you guys think? Let me know in the comments!