Two rival stocks that typically resonate with investors because of their value and steady expansion are Coca-Cola (KO Quick QuoteKO - Free Report) ) and PepsiCo (PEP Quick QuotePEP - Free Report) ). Now is a good time to see if this resonation is holding with both reporting their Q4 results for fiscal 2023 within the last week.

Let’s take a look at the quarterly reviews for these beverage giants along with their guidance, recent performance, and valuations to see if now is a good time to buy.

Coca-Cola Q4 Review

Reporting Q4 results this morning Coca-Cola was able to beat top and bottom-line expectations attributed to higher sales prices despite volume falling -1% in its core North American segment. Fourth quarter earnings of $0.49 a share topped the Zacks Consensus by 2% and rose 9% year over year. On the top line, Q4 sales of $10.84 billion surpassed estimates by 2% as well and were up 7% from the comparative quarter.

Coca-Cola has beaten earnings expectations in each of its last four quarterly reports and has now topped sales estimates for 12 consecutive quarters. Overall, Coca-Cola’s total sales grew 6% in FY23 to $45.8 billion with annual earnings rising 8% to $2.69 per share.  

Image Source: Zacks Investment Research

Pepsi Q4 Review

Pepsi also attested to slower U.S. sales when it reported its Q4 results last Friday and stated its North American beverage volume was down -6%. However, Pepsi was able to beat earnings expectations despite missing top line estimates for the first time since 2018. Quarterly sales of $27.85 billion missed estimates of $28.24 billion by -1% and were slightly down from $27.99 billion a year ago which was Pepsi’s first revenue decline in almost four years.

In regards to Pepsi’s snack business which separates the company’s offerings from Coca-Cola, its Quaker Foods and Frito-Lay North American segments also saw lower volumes of -8% and -2% respectively. Still, Q4 earnings of $1.78 per share came in 3% better than expected and was up 6% YoY. Despite an end to an unprecedented streak of surpassing sales expectations, Pepsi has now topped earnings estimates for eight consecutive quarters. Furthermore, total sales were up 6% in FY23 to $91.47 billion with annual EPS spiking 12% to $7.62 per share.

Image Source: Zacks Investment Research

Fiscal 2024 Guidance

In their guidance for FY24, Coca-Cola forecasts revenue growth of 6-7% and a 4-5% increase in EPS while Pepsi expects a 4% increase in revenue and EPS growth of at least 8%.

Recent Performance & Valuation

Pepsi shares are down -1% in the last year while Coca-Cola’s stock is down -5% with both underperforming the S&P 500’s +22% and their Zacks Beverages-Soft Drinks Market’s +7%. With that being said, over the last three years, Pepsi’s +25% has roughly matched the benchmark although this has trailed its Zack Subindustry’s +33% while Coca-Cola’s +16% has lagged further behind.

Image Source: Zacks Investment Research

Notably, Coca-Cola and Pepsi's stock trade at around 21X forward earnings which is on par with the S&P 500 and near their industry average of 19.6X with both being historical leaders in the space.

Image Source: Zacks Investment Research

Exceptional Dividend Growth

Being “dividend kings” and increasing their payouts for at least 50 consecutive years has continued to bolster the value of Coca-Cola and Pepsi stock. Coca-Cola has raised its dividend for 62 consecutive years with Pepsi at 52 years and counting. At the moment Coca-Cola’s 3.08% annual dividend yield slightly tops Pepsi’s 2.97%.

Image Source: Zacks Investment Research

Bottom Line

Although Coca-Cola and Pepsi are dealing with lower volumes attributed to consumers being more conservative on their budgets both stocks land a Zacks Rank #3 (Hold). To that point, longer-term investors may be rewarded from current levels with Coca-Cola and Pepsi still expecting steady growth in FY24 while offering generous and safe dividends to shareholders.