Financial Comparison: PepsiCo (NASDAQ:PEP) & Luckin Coffee (OTCMKTS:LKNCY)

Luckin Coffee (OTCMKTS:LKNCY) and PepsiCo (NASDAQ:PEP) are both consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitability, analyst recommendations and risk.

Risk and Volatility

Luckin Coffee has a beta of -0.28, meaning that its stock price is 128% less volatile than the S&P 500. Comparatively, PepsiCo has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500.

Profitability

This table compares Luckin Coffee and PepsiCo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Luckin Coffee	8.45%	33.69%	17.02%
PepsiCo	7.82%	57.58%	10.43%

Insider and Institutional Ownership

0.5% of Luckin Coffee shares are owned by institutional investors. Comparatively, 73.1% of PepsiCo shares are owned by institutional investors. 2.7% of Luckin Coffee shares are owned by company insiders. Comparatively, 0.1% of PepsiCo shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Luckin Coffee and PepsiCo”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Luckin Coffee	$4.72 billion	2.04	$401.71 million	$1.76	19.32
PepsiCo	$91.85 billion	2.19	$9.58 billion	$5.26	27.96

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Luckin Coffee and PepsiCo, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Luckin Coffee	0	1	1	0	2.50
PepsiCo	1	13	8	0	2.32

Luckin Coffee presently has a consensus target price of $52.00, indicating a potential upside of 52.89%. PepsiCo has a consensus target price of $158.75, indicating a potential upside of 7.96%. Given Luckin Coffee’s stronger consensus rating and higher possible upside, research analysts plainly believe Luckin Coffee is more favorable than PepsiCo.

Summary

PepsiCo beats Luckin Coffee on 9 of the 14 factors compared between the two stocks.

About Luckin Coffee

Luckin Coffee Inc. offers retail services of freshly brewed drinks, and pre-made food and beverage items in the People's Republic of China. It offers hot and iced freshly brewed coffee, such as Americano, Latte, Cappuccino, Macchiato, Flat White, and Mocha, as well as specialty coffee based on market and seasonal trends; coconut milk latte products; tea drinks; pre-made beverages; and pre-made food items, such as pastries, sandwiches, and snacks. In addition, the company offers Luckin Pop premium instant coffee and inspirational cups through mobile apps and e-commerce platforms. It operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms for third-party payment channels. Further, the company offers technical and consultation services; and manufactures materials for products. Luckin Coffee Inc. was incorporated in 2017 and is headquartered in Xiamen, the People's Republic of China.

About PepsiCo

PepsiCo, Inc. engages in the manufacture, marketing, distribution, and sale of various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region. It provides dips, cheese-flavored snacks, and spreads, as well as corn, potato, and tortilla chips; cereals, rice, pasta, mixes and syrups, granola bars, grits, oatmeal, rice cakes, and side dishes; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea, coffee, and juices; dairy products; and sparkling water makers and related products, as well as distributes alcoholic beverages under Hard MTN Dew brand. The company offers its products primarily under the Lay’s, Doritos, Fritos, Tostitos, BaiCaoWei, Cheetos, Cap’n Crunch, Life, Pearl Milling Company, Gatorade, Pepsi-Cola, Mountain Dew, Quaker, Rice-A-Roni, Aquafina, Bubly, Emperador, Diet Mountain Dew, Diet Pepsi, Gatorade Zero, Crush, Propel, Dr Pepper, Schweppes, Marias Gamesa, Ruffles, Sabritas, Saladitas, Tostitos, 7UP, Diet 7UP, H2oh!, Manzanita Sol, Mirinda, Pepsi Black, Pepsi Max, San Carlos, Toddy, Walkers, Chipsy, Kurkure, Sasko, Spekko, White Star, Smith’s, Sting, SodaStream, Lubimyj Sad, Agusha, Chudo, Domik v Derevne, Lipton, and other brands. It serves wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, and others through a network of direct-store-delivery, customer warehouse, and distributor networks, as well as directly to consumers through e-commerce platforms and retailers. The company was founded in 1898 and is based in Purchase, New York.