In the last three years, the average operating margin of Coca-Cola was 22% compared to PepsiCo’s 14%. Despite this margin advantage, Coca-Cola's ROE (return on equity) for 2014 stood at 22% (28% for 2012), lower than the 31% (29% for 2012) ROE generated by PepsiCo. Coca-Cola has higher margins than PepsiCo; however the latter seems to be using its capital more efficiently leading to higher return on invested capital for PepsiCo. Further, PepsiCo's debt/equity mix works in favor of its equity shareholders, generating a higher ROE compared to Coca-Cola.
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