How has Coca-Cola's stock price risen so much while Pepsi's stock has fallen in the past few years?

Research note · September 26, 2026 · Prices through September 25

Coca-Cola’s shares have risen 38% since the end of 2022. PepsiCo’s have fallen 29%. Yet both companies increased annual adjusted earnings per share by about one-fifth between 2022 and 2025. Why did similar earnings growth produce such different shareholder outcomes? [1][2][3][4][5]

The organizing idea is simple: investors changed the price they would pay for those earnings. Using the corresponding annual adjusted results, Coke’s earnings multiple rose from roughly 26 to 29 times, while PepsiCo’s fell from roughly 27 to 16 times. That repricing accounts for almost all of the 67-percentage-point difference in their share-price returns. [1][2][3][4][5]

Our view is that the direction of the change makes sense. Coke has demonstrated more resilient growth and margins, while PepsiCo’s North American businesses have struggled to turn pricing into sustainable demand. Investors have become more confident in Coke’s future earnings and less confident in PepsiCo’s. The harder question is whether the valuation gap has become larger than the operating differences warrant.

Similar cumulative earnings growth accompanied a 67-percentage-point gap in share-price returns.

Sources: Fiscal.ai and company earnings releases. Share-price returns exclude dividends; earnings growth uses company-defined adjusted diluted EPS. [1][2][3][4][5]

PepsiCo’s earnings grew; the market’s confidence shrank

A share price can be separated into earnings per share and the multiple investors assign to those earnings. The multiple reflects expectations about growth, durability and risk. A business can therefore earn more while its stock falls if investors become sufficiently less enthusiastic about what comes next.

That is what happened to PepsiCo. Core EPS increased from $6.79 in 2022 to $8.14 in 2025, a gain of 19.9%. Coke’s comparable EPS rose from $2.48 to $3.00, or 21.0%. The divergence emerged more clearly late in the period: PepsiCo’s core EPS slipped from $8.16 in 2024, while Coke continued to grow. Similar cumulative growth concealed different recent trajectories. [2][3][4][6][5]

PepsiCo’s modest initial premium became a substantial discount as its earnings momentum weakened.

Method: prices divided by each company’s annual adjusted EPS; starting multiples retrospectively use FY2022 results published after the year-end close. Ending multiples use FY2025 results. Coke’s “comparable” and PepsiCo’s “core” EPS follow their respective non-GAAP definitions. Sources: Fiscal.ai and company releases. [1][2][3][4][5]

The arithmetic is striking. Holding the starting multiples constant, the difference in adjusted EPS growth would have produced only about 1.1 percentage points of relative share-price performance. Revaluing those ending earnings accounts for the remaining 65.8 points. This calculation assigns the interaction between earnings and multiples to valuation; expectations about future fundamentals sit inside that valuation term. [1][2][3][4][5]

We are skeptical of the explanation that PepsiCo simply began at an enormous premium. Its starting multiple was only about 3.7% above Coke’s on this convention. The larger development was the emergence of a substantial Coke premium. Nor does the conclusion depend on choosing the end of 2022: starting at the end of 2023 gives Coke a 49% price gain and PepsiCo a 24% decline through the same endpoint. [1][2][4]

The valuation arithmetic tells us where the gap appeared. To understand why investors changed their minds, we need to look inside PepsiCo’s business.

PepsiCo’s North American slowdown hit a major profit engine

The comparison extends well beyond two cola brands. PepsiCo owns substantial food operations as well as beverages, and its North American businesses dominate its revenue base. Foods and beverages in that region generated $55.7 billion in 2025, or 59% of company revenue. Foods North America alone produced $6.17 billion—46% of reported segment operating profit before corporate expenses. Those shares are calculated from the company’s segment accounts, including their reported accounting charges. [7]

That concentration made the slowdown consequential. PepsiCo’s organic revenue growth fell from 14.4% in 2022 to 9.5% in 2023, then to 2.0% in 2024 and 1.7% in 2025. Coke slowed too, but retained a stronger pace. [4][8][6][5][9][10][3]

PepsiCo’s organic growth slowed much more sharply as the post-inflation pricing surge faded.

Sources: company earnings releases. Annual organic revenue growth follows each company’s definitions and excludes specified currency and structural effects. [11][9][10][3][4][8][6][5]

The mechanism begins at the shelf. Higher prices can support revenue even as customers buy fewer units. For a company running factories and distribution routes, weaker throughput also leaves operating costs spread across fewer purchases. PepsiCo’s 2025 North American revenue bridges show that tension: positive effective pricing accompanied negative organic-volume contributions in both foods and beverages. Its operating footprint makes the demand response important to profitability. [5][7]

Management’s response makes the problem tangible. In December 2025, PepsiCo announced initiatives emphasizing everyday value, productivity and North American operating changes following engagement with Elliott Investment Management. Ramon Laguarta said the plans aimed to “accelerate organic revenue growth, deliver record productivity savings and improve core operating margin—starting in 2026.” The company was proposing to use operating improvements to help rebuild demand and profitability together. [12]

By the second quarter of 2026, the tradeoff remained visible. North American foods’ revenue bridge showed roughly flat organic-volume contribution alongside a 2% decline in effective net pricing. PepsiCo’s company-wide core operating margin fell 40 basis points, even as core operating profit increased 4%. Affordability initiatives were reaching the customer while shareholders were still waiting for stronger profit conversion. [13][14]

Our judgment is that restoring demand requires investment, and investors remain uncertain how quickly that spending will restore profitable growth. The important test is whether better value brings enough additional business to cover its cost. A stabilization purchased through lower pricing is an earlier stage of recovery than growth accompanied by rising margins.

Coke earned its resilience premium without a consumption boom

Coke’s stronger results need careful interpretation. Organic revenue grew 12% in 2023, 12% in 2024 and 5% in 2025, with pricing and mix supplying much of the increase. In 2025, four points of price/mix and one point of concentrate-sales growth supported the organic revenue gain. Comparable operating margin increased to 31.2% from 30.0%, despite flat annual unit-case growth. [9][10][3]

The physical scale tells a quieter story than the stock chart. Coke’s system sold 32.7 billion cases in 2022 and 33.8 billion in 2025. Dividing the latter by the former gives cumulative growth of just 3.4%, or about 1.1% annually. Our interpretation is that investors rewarded the company’s ability to monetize and sustain its franchise, rather than an extraordinary multiyear increase in consumption. [15][16]

The latest quarter gives the favorable interpretation more substance. In Q2 2026, global case volume grew 5%, organic revenue increased 6% and comparable EPS rose 11%. Coca-Cola Zero Sugar volume grew 16%, providing a concrete example of product innovation contributing to demand across geographic segments. The overall case figure puts that product success in company-wide perspective. [17]

Coke’s structure helps explain how it translates demand into earnings. Concentrate operations accounted for 59% of revenue in 2025. Its network of independent bottlers performs much of the physical production and distribution, while the parent captures substantial value through brands and concentrates. Coke also retains finished-product operations, so the division of work is a matter of degree. [18]

Production costs still land somewhere. Coca-Cola Consolidated, a major US bottler, said higher input costs continued to pressure gross margins in Q2 2026. Its experience shows why the parent’s margin resilience can coexist with harder economics elsewhere in the system. PepsiCo’s ownership of substantial manufacturing and distribution operations puts more of those physical operating pressures within the business investors own. [19][7]

Geography adds another layer. The United States represented 16% of Coke’s worldwide system cases in 2025. PepsiCo’s North American segments generated roughly 59% of its revenue. The measures describe different economic exposures—system cases and consolidated sales—but they help explain why US consumer pressure can affect the two companies differently. [16][7]

Our view is that business model and geography helped Coke remain resilient. Those structures were already in place before the share-price divergence. What changed was their interaction with slowing demand, pricing fatigue and execution. That is why structure explains the transmission of the shock better than its timing.

Consumer pressure alone cannot explain PepsiCo’s results

A broad consumer explanation is appealing because it seems to account for everything at once: stretched budgets, health concerns and less appetite for discretionary snacks. We think it explains part of the pressure. The differing outcomes among companies suggest that execution matters too.

Consider beverages within North America. Coke reported 3% unit-case growth in Q2 2026, while PepsiCo’s North American beverage revenue bridge showed a negative organic-volume contribution. Keurig Dr Pepper reported 6.5% volume/mix growth in US refreshment beverages during the quarter. These measures have different product coverage and definitions, but the contrast weakens the idea that the same consumer conditions dictated the same outcome for every supplier. [17][13][20]

We are also skeptical that GLP-1 adoption is the principal explanation for the stock divergence. Research linking household purchases to adoption finds lower grocery spending after households begin using the medicines. That is a credible demand headwind. Its measured scope is adopting households; translating it into PepsiCo’s aggregate sales or valuation requires evidence on adoption, category exposure and substitution that the stock comparison cannot supply. [21]

Our best reading is a combination of consumer pressure and PepsiCo-specific execution problems. We would give the health explanation more weight if representative evidence tied adoption to a material contraction across the snack market. For now, it is more useful to watch whether PepsiCo’s affordability and operating changes improve its own volumes and margins.

The valuation gap makes a PepsiCo recovery consequential

The strongest challenge to our interpretation comes from PepsiCo’s improving global results. In Q2 2026, convenient-food organic volume increased 3% and beverage organic volume increased 2%. Core EPS rose 4% in the quarter and 6% in the first half. International operations contributed approximately 46% of reported segment operating profit in 2025, providing a substantial source of diversification while North America works through its problems. [14][13][7]

That counterargument deserves substantial weight when considering future returns. Investors may be penalizing a repairable problem just as the repair starts to work. Meanwhile, Coke’s modest multiyear case growth shows how much of its success has depended on monetization and margins. Its higher valuation makes any disappointment more consequential.

The size of the gap is clear even using management’s current earnings outlooks. Coke’s projected 9–10% comparable EPS growth implies $3.27–$3.30 for 2026 and a guidance-based multiple of 26.6–26.9 times. PepsiCo’s projected 5–7% reported-dollar core EPS growth implies approximately $8.55–$8.71 and a multiple of 14.8–15.1 times. These ranges apply management’s growth guidance to 2025 adjusted EPS, then divide September 25 share prices by the resulting earnings. [1][3][5][17][13]

We think the operating evidence supports a Coke premium. We have insufficient evidence to conclude that the current size of that premium is fair. Explaining why Coke outperformed therefore gives us no automatic reason to expect the same shares to lead from here.

For PepsiCo, our threshold is a profitable North American recovery: at least two consecutive quarters of positive organic-volume contribution in both foods and beverages, accompanied by stable or expanding core margins. Organic growth consistently reaching or exceeding the top of its current 2–4% guidance range, with North America participating, would strengthen that case. These are our monitoring tests against management’s published outlook. [14]

For Coke, two quarters of flat or falling global cases alongside slower organic revenue and margin pressure would weaken the justification for its premium. A reduction in its current approximately 5% organic-growth or 9–10% comparable-EPS-growth outlook would sharpen that concern. [17]

PepsiCo needs to show that better value for customers can rebuild value for shareholders. Coke needs to keep earning the confidence already embedded in its price.