Compare Stocks › COST vs PEP

Costco Wholesale Corporation (COST) vs PepsiCo, Inc. (PEP): Which Is the Better Buy in 2026?

As of 2026-06-19, COST is overvalued at $951, with a DCF intrinsic value of $451 and a margin of safety of -111%. PEP is overvalued at $142, with an intrinsic value of $82 and a margin of safety of -74%. Of the two, PEP has the wider margin of safety.

COST

Costco Wholesale Corporation

$951.45

PEP

PepsiCo, Inc.

$142.02

Rewards

COST

★Costco Wholesale Corporation has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
★Costco Wholesale Corporation scores 96/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
★Free cash flow has grown at a 30.8% CAGR over the past 4 years, demonstrating strong earnings power growth.

PEP

★PepsiCo, Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
★PepsiCo, Inc. scores 88/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
★Free cash flow has grown at a 11.0% CAGR over the past 4 years, demonstrating strong earnings power growth.

Risks

COST

⚠Gross margin of 12.9% is low, suggesting a competitive or commodity-like market with limited pricing power.
⚠Despite buyback spending, shares outstanding increased in 3 out of 4 years — stock-based compensation is offsetting repurchases.
⚠FCF yield of 1.6% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.

PEP

⚠High leverage (1.95x net debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.

Key Valuation Metrics

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COST

PEP

Valuation

$6.95B

Free Cash Flow

$8.75B

1.65%

FCF Yield

4.51%

47.98

Trailing P/E

22.30

42.05

Forward P/E

15.59

Quality & Moat

31.32%

ROIC

17.22%

29.15%

ROE

43.88%

12.88%

Gross Margin

54.38%

4.82

PEG Ratio

1.57

Balance Sheet Safety

Net cash

Net Debt / Equity

1.95

N/A

Interest Coverage

N/A

-0.07

Net Debt / EBITDA

2.24

0.60%

Dividend Yield

4.02%

COST: 3Ties: 1PEP: 8

COSTPEP

Historical Fundamentals

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COST

Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

PEP

$1 Retained Earnings Test

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COST

$19.41

created per $1 retained over 3 years

Exceptional Value Creator

Σ Retained

$9.28B

Δ Market Cap

+$180.14B

Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

PEP

$-9.83

created per $1 retained over 3 years

Market Cap Declined

Σ Retained

$5.34B

Δ Market Cap

$-52.53B

Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

Discounted Cash Flow (DCF) Analysis

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COST

110.9% Overvalued

Price is 110.9% above estimated fair value

Current Price: $951.45

Strongly undervalued

Fairly valued

Strongly overvalued

Fair Value: $451.13

Strongly undervalued

Undervalued

Fairly valued

Overvalued

Strongly overvalued

PEP

73.7% Overvalued

Price is 73.7% above estimated fair value

Current Price: $142.02

Strongly undervalued

Fairly valued

Strongly overvalued

Fair Value: $81.78

Strongly undervalued

Undervalued

Fairly valued

Overvalued

Strongly overvalued

Reverse DCF — Market-Implied Growth

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COST

What growth rate is the market pricing in at $951?

+20.7%

Market-Implied Owner Earnings Growth

Standard FCF implies +22.8%

The market implies +20.7% Owner Earnings growth, above historical trends.

Standard FCF implies a demanding +22.8%, reflecting heavy growth investment.

PEP

What growth rate is the market pricing in at $142?

+12.6%

Market-Implied Owner Earnings Growth

Standard FCF implies +11.8%

The market implies +12.6% Owner Earnings growth, above historical trends.

Standard FCF implies a demanding +11.8%, reflecting heavy growth investment.

Economic Moat Score

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COST

96/100

Wide Moat

70+ Wide · 40-69 Narrow · <40 None

Wide moat with strength across all dimensions. ROIC Consistency is the standout factor.

Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.

PEP

88/100

Wide Moat

70+ Wide · 40-69 Narrow · <40 None

Wide moat with strength across all dimensions. Revenue Predictability is the standout factor.

Forensic Accounting

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COST

-2.65

Unlikely Manipulator

Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

M-Score Trend

Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

PEP

-2.57

Unlikely Manipulator

Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

M-Score Trend

Ownership Breakdown

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COST

Insiders 0.2%Institutions 73.8%Retail & Other 26.0%

No. of Institutional Holders5,187

High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.

PEP

Insiders 0.2%Institutions 80.9%Retail & Other 18.9%

No. of Institutional Holders4,456

High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.

Insider Buying Activity

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COST

Buys (3M)

Buys (12M)

No open market insider purchases found.

Open market purchases · includes direct & indirect ownership · excludes option exercises

PEP

Buys (3M)

Buys (12M)

No open market insider purchases found.

Open market purchases · includes direct & indirect ownership · excludes option exercises

Open market purchases · includes direct & indirect ownership · excludes option exercises.

Insider Selling Activity

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COST

Sells (3M)

Sells (12M)

Total value (12M): $18.18M

FRATES CATON

Officer

$695,100

@ $993.00 · 2026-04-01

ADAMO CLAUDINE

Officer

$732,205

@ $1003.02 · 2026-03-09

JONES TERESA A

Officer

$838,318

@ $986.26 · 2026-01-21

DECKER SUSAN LYNNE

Director

$437,390

@ $955.00 · 2026-01-16

KLAUER JAMES C

Officer

$1.41M

@ $939.00 · 2026-01-14

POLIT JAVIER

Officer

$2.26M

@ $866.38 · 2025-12-30

WILCOX WILLIAM RICHARD

Officer

$2.23M

@ $930.13 · 2025-11-07

ADAMO CLAUDINE

Officer

$2.53M

@ $935.68 · 2025-10-24

BARBRE TIFFANY MARIE

Divisional Officer

$1.16M

@ $934.91 · 2025-10-24

FRATES CATON

Officer

$1.40M

@ $910.02 · 2025-09-29

JONES TERESA A

Officer

$595,230

@ $992.05 · 2025-08-20

RUBANENKO YORAM B.

Officer

$3.90M

@ $974.96 · 2025-07-14

DECKER SUSAN LYNNE

Director

$536,058

@ $980.00 · 2025-06-18

CALLANS PATRICK J

Officer

$3.01M

@ $1002.77 · 2025-06-09

RIEL PIERRE

Officer

$2.03M

@ $1014.15 · 2025-06-06

KLAUER JAMES C

Officer

$3.92M

@ $981.07 · 2025-04-17

MILLERCHIP GARY

Officer

$1.03M

@ $940.01 · 2025-03-27

ADAMO CLAUDINE

Officer

$830,304

@ $922.56 · 2025-03-24

FRATES CATON

Officer

$765,213

@ $900.25 · 2025-03-18

VACHRIS ROLAND MICHAEL

Chief Executive Officer

$3.35M

@ $931.00 · 2025-03-11

GALANTI RICHARD ALAN

Officer and Director

$1.27M

@ $894.97 · 2024-10-24

JONES TERESA A

Officer

$717,236

@ $896.54 · 2024-10-23

RIEL PIERRE

Officer

$1.79M

@ $896.71 · 2024-10-15

CALLANS PATRICK J

Officer

$2.23M

@ $893.94 · 2024-09-30

ADAMO CLAUDINE

Officer

$2.84M

@ $888.99 · 2024-09-30

FRATES CATON

Officer

$1.50M

@ $883.35 · 2024-09-30

GALANTI RICHARD ALAN

Officer and Director

$868,962

@ $868.96 · 2024-08-15

DECKER SUSAN LYNNE

Director

$543,430

@ $876.50 · 2024-08-15

JONES TERESA A

Officer

$3,330

@ $832.50 · 2024-07-25

HINES DANIEL M

Officer

$2.54M

@ $846.37 · 2024-07-15

DENMAN KENNETH D

Director

$298,036

@ $851.53 · 2024-07-15

Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives

PEP

Sells (3M)

Sells (12M)

Total value (12M): $4.68M

LAGUARTA RAMON L

Chief Executive Officer

$4.68M

@ $167.39 · 2026-03-02

GALLAGHER MARIE T

Officer

$3.99M

@ $159.55 · 2025-03-04

KRISHNAN RAMKUMAR

Chief Executive Officer

$1.50M

@ $150.97 · 2025-03-03

WILLIAMS STEVEN C

Officer

$2.71M

@ $150.89 · 2025-03-03

FLAVELL DAVID JAMES

General Counsel

$1.04M

@ $150.90 · 2025-03-03

LAGUARTA RAMON L

Chief Executive Officer

$7.74M

@ $154.90 · 2025-03-03

SANTILLI PAULA ALEJANDRA

Officer

$1.18M

@ $151.89 · 2025-02-27

Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives

Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.

🎭 Mr. Market's Mood

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COST

😐Neutral(52/100)

"Market is pricing this stock without strong emotion in either direction"

Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

PEP

😐Neutral(48/100)

"Market is pricing this stock without strong emotion in either direction"

Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

⚖️ Buffett Signal

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COST

⚪Awaiting DCF Data

The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

DCF Margin of Safety: N/AMr. Market's Mood: Neutral (52)

PEP

⚪Awaiting DCF Data

The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

DCF Margin of Safety: N/AMr. Market's Mood: Neutral (48)

View COST Full Analysis View PEP Full Analysis

Frequently Asked Questions: COST vs PEP

Is Costco Wholesale Corporation or PepsiCo, Inc. more undervalued in 2026?▼

Based on our discounted cash flow model, PEP trades at a -73.7% margin of safety (intrinsic value $82 vs. price $142), compared to COST's -110.9% margin of safety (intrinsic $451 vs. $951).

Which stock has a wider economic moat, Costco Wholesale Corporation or PepsiCo, Inc.?▼

COST scores 96/100 (Wide moat), while PEP scores 88/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.

Which company has better free cash flow, Costco Wholesale Corporation or PepsiCo, Inc.?▼

PepsiCo, Inc. (PEP) generates a 4.5% free cash flow yield, compared to Costco Wholesale Corporation's 1.6%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.

Which stock has higher return on invested capital, Costco Wholesale Corporation or PepsiCo, Inc.?▼

COST earns 31.3% ROIC versus PEP's 17.2%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.

Which dividend is safer, Costco Wholesale Corporation's or PepsiCo, Inc.'s?▼

COST's dividend earns a safety score of 85/100 (Very Safe), compared to PEP's 34/100 (Unsafe). COST has raised its dividend for 0 consecutive years.