Coca-Cola's Hidden Advantage Over PepsiCo

Coca-Cola's (KO) stock has been on a high note after its second-quarter earnings report, where it beat revenue and earnings estimates.

Despite this, investors may be tempted to choose PepsiCo over Coca-Cola due to its lower P/E ratio and higher dividend yield of 4% compared to Coca-Cola's 2.3%.

However, a closer look at Coca-Cola's business model reveals why it might justify its premium valuation. Unlike PepsiCo, Coca-Cola outsources all bottling, trucking, and distribution to third parties, making it an asset-light business with higher operating margins.

This advantage is not temporary; data shows that Coca-Cola has outperformed PepsiCo in nearly every time period going back to 1990.