Cumberland Pharmaceuticals (NASDAQ:CPIX) and Merck & Co., Inc. (NYSE:MRK) are both medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.
Profitability
This table compares Cumberland Pharmaceuticals and Merck & Co., Inc.'s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Cumberland Pharmaceuticals | -8.36% | 3.86% | 1.92% |
| Merck & Co., Inc. | 24.33% | 53.83% | 16.83% |
Risk & Volatility
Cumberland Pharmaceuticals has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500. Comparatively, Merck & Co., Inc. has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500.
Valuation & Earnings
This table compares Cumberland Pharmaceuticals and Merck & Co., Inc.'s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Cumberland Pharmaceuticals | $47.53 million | 0.94 | $-3,540,000.00 | $0.23 | 13.00 |
| Merck & Co., Inc. | $46.84 billion | 4.19 | $9.84 billion | $5.19 | 14.93 |
Merck & Co., Inc. has higher revenue and earnings than Cumberland Pharmaceuticals. Cumberland Pharmaceuticals is trading at a lower price-to-earnings ratio than Merck & Co., Inc., indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current recommendations and price targets for Cumberland Pharmaceuticals and Merck & Co., Inc., as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Cumberland Pharmaceuticals | 0 | 0 | 1 | 0 | 3.00 |
| Merck & Co., Inc. | 0 | 2 | 11 | 0 | 2.85 |
Merck & Co., Inc. has a consensus target price of $96.2727, suggesting a potential upside of 24.27%. Given Merck & Co., Inc.'s higher probable upside, analysts clearly believe Merck & Co., Inc. is more favorable than Cumberland Pharmaceuticals.
Institutional & Insider Ownership
26.2% of Cumberland Pharmaceuticals shares are held by institutional investors. Comparatively, 72.9% of Merck & Co., Inc. shares are held by institutional investors. 39.7% of Cumberland Pharmaceuticals shares are held by company insiders. Comparatively, 0.3% of Merck & Co., Inc. shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Summary
Merck & Co., Inc. beats Cumberland Pharmaceuticals on 12 of the 14 factors compared between the two stocks.
