Avoid PepsiCo: A Story Of Low Grow, High Competition

PepsiCo (PEP) is the largest food and beverages business in North America and second largest in the world. Coca Cola (KO) - the company's main competitor holds the number one position in the industry. PepsiCo has a $106 billion market capitalization and operates in almost 200 countries. We recommend a neutral rating on Pepsi as KO offers better growth prospects than PepsiCo.

PepsiCo has a forward P/E of 16x, which is on the lower end as compared to KO and higher than DPS. However, PepsiCo's PEG of 4 reflects that the company offers an expensive growth as compared to its competitors KO and DPS. PepsiCo has a lower growth rate of 4.2% per annum for the next five years as compared to 7.75% of its competitors.
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