The company has a high return on equity, which has remained above 30%, with the exception of a brief decrease in 2005. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
Currently, PepsiCo is attractively valued at 15.70 times earnings, yields 3.30% and has a sustainable dividend payout. In comparison Coca Cola (KO) yields 3% and trades at a P/E of 19. I find PepsiCo to be a better value than Coca Cola in the current environment. Investors who subtract the one-time accounting gains from Coke's EPS would find Coca Cola overvalued relative to PepsiCo. As a result, I would give major preference to PepsiCo shares over Coca Cola.
Full Disclosure: Long PEP and KO