Financial Review: Coffee (NASDAQ:JVA) versus PepsiCo (NASDAQ:PEP)

PepsiCo (NASDAQ:PEP) and Coffee (NASDAQ:JVA) are both consumer staples companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, risk, profitability and valuation.

Analyst Ratings

This is a breakdown of current recommendations and price targets for PepsiCo and Coffee, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PepsiCo	1	11	8	0	2.35
Coffee	0	1	0	0	2.00

PepsiCo currently has a consensus target price of $168.50, indicating a potential upside of 2.79%. Given PepsiCo’s stronger consensus rating and higher possible upside, equities research analysts clearly believe PepsiCo is more favorable than Coffee.

Institutional and Insider Ownership

73.1% of PepsiCo shares are owned by institutional investors. 0.1% of PepsiCo shares are owned by company insiders. Comparatively, 22.1% of Coffee shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

PepsiCo pays an annual dividend of $5.69 per share and has a dividend yield of 3.5%. Coffee pays an annual dividend of $0.08 per share and has a dividend yield of 2.6%. PepsiCo pays out 94.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Coffee pays out 32.0% of its earnings in the form of a dividend. PepsiCo has increased its dividend for 54 consecutive years. PepsiCo is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares PepsiCo and Coffee”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PepsiCo	$93.93 billion	2.39	$8.24 billion	$6.00	27.32
Coffee	$96.28 million	0.19	$1.40 million	$0.25	12.48

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PepsiCo	8.77%	57.92%	10.62%
Coffee	1.45%	5.11%	3.36%

Risk and Volatility

PepsiCo has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500. Comparatively, Coffee has a beta of 1.62, suggesting that its share price is 62% more volatile than the S&P 500.

Summary

PepsiCo beats Coffee on 14 of the 17 factors compared between the two stocks.

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.

About Coffee

Coffee Holding Co., Inc. engages in manufacturing, roasting, packaging, marketing, and distributing roasted and blended coffees in the United States, Australia, Canada, England, and China. It offers wholesale green coffee products, including unroasted raw beans that are sold to large, medium, and small roasters, as well as coffee shop operators; and roasts, blends, packages, and sells coffee under private labels in cans, brick packages, and instants of various sizes. The company also roasts and blends company label branded coffee to supermarkets, wholesalers, and individually owned stores; and sells tabletop coffee roasting equipment, instant coffees, and tea products for its customers. Its coffee brands include Cafe Caribe, Don Manuel, S&W, Cafe Supremo, Via Roma, Premier Roasters, and Harmony Bay. The company was formerly known as Transpacific International Group Corp and changed its name to Coffee Holding Co., Inc. in April 1998. Coffee Holding Co., Inc. was founded in 1971 and is headquartered in Staten Island, New York.