Investors comparing consumer staples stocks often rely on metrics like price-to-sales ratios to cut through noise and make objective judgments about relative value.
Kraft Heinz (NYSE: KHC) cannot be evaluated using the price-to-earnings ratio due to its lack of earnings, making the price-to-sales ratio the more appropriate tool for analysis.
As of September 18, Kraft Heinz carried a price-to-sales ratio of 1.2, compared to 1.8 for PepsiCo (NASDAQ: PEP), representing a meaningful gap between the two food and beverage giants.
Both companies trade at a significant discount to the broader S&P 500 index, which carries a price-to-sales multiple of 3.8, reflecting the market’s general appetite for growth-oriented sectors.
Things have not gone smoothly for Kraft Heinz since Kraft Foods and H.J. Heinz merged back in July 2015, with the business struggling to find consistent momentum ever since.
The board of directors brought in Steve Cahillane as CEO in an attempt to reverse the company’s fortunes, with Cahillane officially starting in the role on January 1.
Early in his tenure, Cahillane canceled a previously announced plan to split the business into separate groceries and sauces/spreads units, instead opting for a more unified strategic approach.
He also committed to increasing spending on marketing, sales, and research and development by $600 million, signaling a desire to invest aggressively in rebuilding brand strength.
Despite those moves, sales results have continued to weaken, with second-quarter sales falling 1.3% after adjustments for foreign-currency translations and divested assets.
For the full year 2026, management has guided for a 0.5% to 2% decline in sales, offering little optimism that a meaningful turnaround is imminent under the current strategy.
PepsiCo’s situation looks more encouraging by comparison, particularly following engagement with activist investor Elliott Investment Management, which pushed the company to sharpen its approach to growth.
PepsiCo responded by lowering prices, developing new products, and cutting costs, a combination that appears to be resonating with consumers in a challenging spending environment.
The results have been tangible, with PepsiCo’s second-quarter adjusted revenue growing 2.4% compared to a year ago, with higher volume contributing one percentage point of that increase.
Given Kraft Heinz’s persistent sales declines and limited near-term catalysts, its discounted valuation relative to PepsiCo and the broader market appears to reflect genuine structural concerns rather than a market overreaction.
For investors seeking value in the consumer staples space, PepsiCo’s lower valuation versus the market and its improving business trajectory make it the more compelling option between the two.
