Coke and Pepsi Stocks are Both Struggling

Coca-Cola and PepsiCo’s stocks have struggled this year, hurt by higher interest rates and investor concerns about the possible negative impact of weight loss drugs like Wegovy.

Despite that, both companies topped Wall Street’s estimates for their third-quarter results and raised their full-year forecasts. Rebounding demand for Coke products drove the company to raise its forecast, while Pepsi’s cost-management improvements have bolstered its full-year outlook for earnings.

But only Coke managed to report volume growth. Coke’s overall volume rose 2% in the third quarter, while Pepsi reported flat beverage volume and a 1.5% decline in its food volume. In North America, the differences between the two businesses were stark. Coke reported flat volume, while Pepsi’s North American beverage unit saw volume fall 6%.

Domestic sales for both companies have been affected by softening consumer demand driven by a tightening of belts as high interest rates dampen consumer appetites for discretionary spending, such as dining out.

Still, Coke has raised both its top and bottom-line outlook for the full year, while rival Pepsi upped its forecast for its full-year earnings. Both companies expect their international business to pick up, mostly once the impact of recent price increases kicks in.

Coke has a larger international presence than Pepsi. Roughly 40% of Pepsi’s sales come from outside of the U.S., while more than 60% of Coke’s revenue is derived from international markets.