Pepsico, for starters, currently has a market capitalization of $240bn, with an enterprise value (market capitalization plus net debt) of $277bn.

In addition to beverage brands such as Pepsi, Lipton and Rockstar, amongst others, the group has diversified into snacks and operates a portfolio of brands that will make the mouths of all snack lovers water, including Lays, Cheetos, Doritos, Quaker and Bénénuts.

Although this diversification means that its operating margins are half those of Coca-Cola, it nevertheless ensures that its return on equity is higher than that of its rival. This is truly exceptional, exceeding 50% with very modest use of leverage.

Over the past ten years, Pepsico's sales have grown by 37% and its annual profit by 39%. Out of the $75bn in free cash flow, $43bn has been redirected to dividends and $22bn to share buybacks, net of stock option-related issuances. Meanwhile, acquisitions have consumed $7bn.

The beauty of its business earns the group an average valuation of 25x earnings, within a range bounded by a floor of 20x earnings and a ceiling of 30x  earnings.

Coca-Cola, by comparison, has seen no sales growth in ten years, with 2023 revenue identical to 2014. However, its annual profit grew by 50% over the period, notably thanks to a spectacular expansion of margins.

The Atlanta-based group is beating its rival Pepsico hands down, with an operating margin of around 30%. Its return on equity is nevertheless lower, at around 40%, again with a very modest leverage effect.

Coca-Cola currently has a market capitalization of $300bn and an enterprise value of $327bn. Somewhat ironically, over the past ten years, the group has generated cumulative profits of $75bn, almost exactly the same as Pepsico, and its valuation is also growing at the same rate.

The use of these resources is not so different either, since $67bn was distributed in dividends, $11bn was used for share buybacks—net of stock-option-related issuances—while $9bn was used for acquisitions.

Like PepsiCo, Coca-Cola has been proactive in optimizing its business portfolio, with asset disposals financing half of its acquisitions. On this point too, the two groups follow identical modus operandi.

One difference between the two rivals is the use of share buybacks, which are more common at Pepsi than at Coca-Cola. The explanation is obvious: Coca-Cola's iconic shareholder is Berkshire Hathaway, and Warren Buffett's group, which is influential on its board of directors, is likely to impose a certain discipline on valuation that would trigger share buybacks.

Ultimately, it is difficult to choose between the two. Both Coca-Cola and PepsiCo are remarkably well-managed companies and have been excellent investments. Their stockmarket performance has also been similar over the period studied.