Brown-Forman (BF.B) versus PepsiCo (PEP) Head to Head Comparison

PepsiCo (NASDAQ: PEP) and Brown-Forman (NYSE:BF.B) are both large-cap consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, institutional ownership, analyst recommendations and profitability.

Analyst Ratings

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This is a summary of recent ratings and target prices for PepsiCo and Brown-Forman, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PepsiCo 1 8 5 0 2.29
Brown-Forman 0 12 1 0 2.08

PepsiCo presently has a consensus price target of $122.23, indicating a potential upside of 19.27%. Brown-Forman has a consensus price target of $47.22, indicating a potential downside of 13.34%. Given PepsiCo’s stronger consensus rating and higher probable upside, analysts clearly believe PepsiCo is more favorable than Brown-Forman.

Institutional & Insider Ownership

70.9% of PepsiCo shares are held by institutional investors. Comparatively, 20.3% of Brown-Forman shares are held by institutional investors. 0.3% of PepsiCo shares are held by company insiders. Comparatively, 10.1% of Brown-Forman shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares PepsiCo and Brown-Forman’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PepsiCo $63.53 billion 2.29 $4.86 billion $5.23 19.59
Brown-Forman $3.86 billion 6.79 $669.00 million $1.38 39.49

PepsiCo has higher revenue and earnings than Brown-Forman. PepsiCo is trading at a lower price-to-earnings ratio than Brown-Forman, indicating that it is currently the more affordable of the two stocks.

Dividends

PepsiCo pays an annual dividend of $3.22 per share and has a dividend yield of 3.1%. Brown-Forman pays an annual dividend of $0.63 per share and has a dividend yield of 1.2%. PepsiCo pays out 61.6% of its earnings in the form of a dividend. Brown-Forman pays out 45.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Volatility & Risk

PepsiCo has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, Brown-Forman has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500.

Profitability

This table compares PepsiCo and Brown-Forman’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PepsiCo 7.65% 61.14% 9.71%
Brown-Forman 18.15% 55.27% 16.02%

Summary

PepsiCo beats Brown-Forman on 9 of the 16 factors compared between the two stocks.

PepsiCo Company Profile

PepsiCo, Inc. operates as a food and beverage company worldwide. Its Frito-Lay North America segment offers Lay's and Ruffles potato chips; Doritos, Tostitos, and Santitas tortilla chips; and Cheetos snacks, branded dips, and Fritos corn chips. The company's Quaker Foods North America segment provides cereals, rice, pasta, mixes and syrups, granola bars, grits, oat squares, oatmeal, rice cakes, simply granola, and side dishes under the brands Quaker, Aunt Jemima, Cap'n crunch, life, Quaker Chewy, and Rice-A-Roni. Its North America Beverages segment offers beverage concentrates, fountain syrups, and finished goods under the Aquafina, Diet Mountain Dew, Diet Pepsi, Gatorade, Mist Twst, Mountain Dew, Pepsi, Propel, and Tropicana brands; and ready-to-drink tea, coffee, and juices. The company's Latin America segment provides snack foods under the Cheetos, Doritos, Emperador, Lay's, Marias Gamesa, Rosquinhas Mabel, Ruffles, Sabritas, Saladitas, and Tostitos; cereals and snacks under the Quaker brand; and beverage concentrates, fountain syrups, and finished goods under the 7UP, Diet Pepsi, Gatorade, H2oh!, Manzanita Sol, Mirinda, Pepsi, and Toddy brands. Its Europe Sub-Saharan Africa segment offers snack food; cereals and snacks; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea products; and dairy products under the Agusha, Chudo, and Domik v Derevne brand names. The company's Asia, Middle East and North Africa segment provides snack foods under the Cheetos, Chipsy, Crunchy, Doritos, Kurkure, and Lay's brands; cereals and snacks under the Quaker brand; beverage concentrates, fountain syrups, and finished goods; and ready-to-drink tea products. The company was founded in 1898 and is headquartered in Purchase, New York.

Brown-Forman Company Profile

Brown-Forman Corporation is a spirit and wine company. The Company manufactures, bottles, imports, exports, markets and sells a range of alcoholic beverages. The Company has a portfolio of approximately 40 spirit, wine and ready-to-drink cocktail (RTD) brands. Its principal brands include Jack Daniel’s Tennessee Whiskey, Jack Daniel’s RTDs, Jack Daniel’s Tennessee Honey, Gentleman Jack Rare Tennessee Whiskey, Jack Daniel’s Tennessee Fire, Jack Daniel’s Single Barrel Collection, Jack Daniel’s Sinatra Select, Jack Daniel’s Winter Jack, Jack Daniel’s No. 27 Gold Tennessee Whiskey, Finlandia Vodkas, Finlandia RTDs, Korbel California Brandy, Woodford Reserve Kentucky Bourbons, el Jimador Tequilas, el Jimador New Mix RTDs, Herradura Tequilas, Canadian Mist Canadian Whisky, Sonoma-Cutrer California Wines, Early Times Kentucky Whisky and Bourbon, Chambord Liqueur, Old Forester Kentucky Bourbon, Antiguo Tequila, Pepe Lopez Tequila, Santa Dose Cachaca and Collingwood Canadian Whisky.

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