Pepsi Stakes Its Claim as Coca-Cola's Growth Slows

Coca-Cola (KO) and PepsiCo (PEP) both beat expectations in their Q2 2026 earnings reports, but their performances couldn't be more different. KO's Coca-Cola Zero Sugar drove a 16% volume growth across all regions, with Latin America revenue jumping 16%. The company also reported global unit case volume up 5%, and operating margin expansion to 34.9% from 34.1%. On the other hand, PEP's Frito-Lay North America unit slipped 2%, with PFNA revenue decline being a key vulnerability.

Coca-Cola's new CEO Henrique Braun emphasized the company's focus on leveraging powerful brands and systems to gain value share, delivering revenue, profit, and earnings growth while investing for the long term. PepsiCo, led by Ramon Laguarta, pointed to functional formats as a growth driver, including portion control varieties, diverse ingredients, and functional benefits such as hydration, protein, and fiber.

The two companies' forward P/E multiples are also telling: KO trades at 26x valuation after a one-year run, while PEP's forward P/E is near 16. The share prices reflect the gap between the two businesses, with KO up 27.96% year to date and PEP managing just 1.48%. The author leans towards Pepsi for the second half of 2026 due to its potential for surprise, citing a fixable snack unit, insider buying, and a lower forward P/E multiple.