Head-To-Head Review: Diageo (OTCMKTS:DGEAF) and CocaCola (NYSE:KO)

Diageo (OTCMKTS:DGEAF) and CocaCola (NYSE:KO) are both consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, dividends, risk, analyst recommendations, valuation and institutional ownership.

Valuation and Earnings

This table compares Diageo and CocaCola”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Diageo	N/A	N/A	N/A	$0.78	30.84
CocaCola	$50.13 billion	7.89	$13.11 billion	$3.33	27.61

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Diageo and CocaCola, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Diageo	0	0	0	0	0.00
CocaCola	0	3	15	0	2.83

CocaCola has a consensus price target of $95.76, suggesting a potential upside of 4.16%. Given CocaCola’s stronger consensus rating and higher probable upside, analysts plainly believe CocaCola is more favorable than Diageo.

Dividends

Diageo pays an annual dividend of $0.52 per share and has a dividend yield of 2.2%. CocaCola pays an annual dividend of $2.12 per share and has a dividend yield of 2.3%. Diageo pays out 66.3% of its earnings in the form of a dividend. CocaCola pays out 63.7% 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. CocaCola has increased its dividend for 64 consecutive years. CocaCola is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Diageo and CocaCola’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Diageo	N/A	N/A	N/A
CocaCola	28.56%	39.38%	13.18%

Insider & Institutional Ownership

33.3% of Diageo shares are owned by institutional investors. Comparatively, 70.3% of CocaCola shares are owned by institutional investors. 0.9% of CocaCola shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

CocaCola beats Diageo on 13 of the 14 factors compared between the two stocks.

About Diageo

Diageo plc, together with its subsidiaries, engages in the production, marketing, and sale of alcoholic beverages. It offers scotch, gin, vodka, rum, raki, liqueur, wine, tequila, Chinese white spirits, cachaça, and brandy, as well as beer, including cider and flavoured malt beverages. The company also provides Canadian, Irish, American, and Indian-Made Foreign Liquor whiskies, as well as ready to drink and non-alcoholic products. It provides its products primarily under the Johnnie Walker, Guinness, Tanqueray, Baileys, Smirnoff, Captain Morgan, Crown Royal, Don Julio, Cîroc, Buchanan's, Casamigos, J&B, and Ketel One brands. The company operates in the United States, the United Kingdom, Turkey, Australia, Korea, India, Greater China, Brazil, Mexico, South Africa, Nigeria, and internationally. Diageo plc was incorporated in 1886 and is headquartered in London, the United Kingdom.

About CocaCola

The Coca-Cola Company, a beverage company, manufactures, markets, and sells various nonalcoholic beverages worldwide. The company provides sparkling soft drinks, sparkling flavors; water, sports, coffee, and tea; juice, value-added dairy, and plant-based beverages; and other beverages. It also offers beverage concentrates and syrups, as well as fountain syrups to fountain retailers, such as restaurants and convenience stores. The company sells its products under the Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, caffeine free Diet Coke, Cherry Coke, Fanta Orange, Fanta Zero Orange, Fanta Zero Sugar, Fanta Apple, Sprite, Sprite Zero Sugar, Simply Orange, Simply Apple, Simply Grapefruit, Fresca, Schweppes, Thums Up, Aquarius, Ayataka, BODYARMOR, Ciel, Costa, Dasani, dogadan, FUZE TEA, Georgia, glacéau smartwater, glacéau vitaminwater, Gold Peak, Ice Dew, I LOHAS, Powerade, Topo Chico, AdeS, Del Valle, fairlife, innocent, Minute Maid, and Minute Maid Pulpy brands. It operates through a network of independent bottling partners, distributors, wholesalers, and retailers, as well as through bottling and distribution operators. The company was founded in 1886 and is headquartered in Atlanta, Georgia.