The early 2023 results are in from both Coca-Cola (KO 1.46%) and PepsiCo (PEP 3.11%). And, contrary to many investors' fears, the two consumer staples leaders are seeing no signs of a major slowdown ahead. In fact, Pepsi just raised its fiscal year outlook and Coke reported an encouraging spike in operating profit.

Let's take a closer look at the companies' latest financials to see which one stands out as the better buy for investors right now.

Sales trends

There's mostly positive news regarding growth for both companies. Coca-Cola said on April 24 that organic sales were up a solid 12% through late March compared to a 15% spike in the prior quarter. That result edged past the 10% increase that Pepsi reported a few days later in its beverage segment.

But strong growth in the snack and breakfast food segments allowed PepsiCo's overall sales to rise 14%. Give the edge to Pepsi here, which raised its 2023 outlook to call for organic growth of about 8%, on top of last year's 14% spike. Coke affirmed its guidance for a 7% to 8% uptick this year.

Profit margin

Coke easily wins the profit matchup as its operating profit margin is above 30% of sales compared to PepsiCo's 15%. The gap here reflects several valuable competitive assets of Coke's, including its massive global distribution network, its relative strength around on-the-go drink sales, and its scale.

These factors allow Coke to profit from established brands while giving it a platform to build new franchises. The Smartwater franchise grew volume by 8% this past quarter, for example, with help from popular innovations in the hydration niche.

Pepsi's margins do appear set to begin rebounding, though. On a non-GAAP basis, both gross and operating profit margins edged higher in Q1 thanks to help from several quarters of price hikes along with aggressive cost cutting. Combined with the company's improving growth profile, these shifts point to potentially strengthening profitability in 2024 and beyond.

Cash returns and valuation

Income investors won't find a lot to separate the two stocks at a glance. PepsiCo shares are yielding 2.5% today compared to roughly 2.8% for Coca-Cola. But Coke's dividend is growing more slowly at 5% this year compared to Pepsi's 10% hike for 2023. Both companies favor dividend payments over stock buybacks as their preferred channel for direct shareholder returns.

KO PS Ratio Chart

KO PS Ratio data by YCharts

PepsiCo's stock is valued at a large discount to Coca-Cola's. Its price-to-sales (P/S) ratio is 3 as of early May, or roughly half of Coke's valuation. For that higher price, an investor gets exposure to Coke's much more profitable business, which is on pace to set more sales and earnings records in 2023.

PepsiCo carries potentially less risk due to its lower valuation and its more diverse portfolio of consumer essentials. This diversity was valuable in the earlier phases of the pandemic when spending trends contracted sharply, and so it could provide similar stability in the next recession. But most growth-focused investors will favor Coca-Cola stock today despite its relatively higher price.