Royalty Pharma (NASDAQ:RPRX) and Merck & Co., Inc. (NYSE:MRK) are both large-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.
Analyst Ratings
This is a summary of current ratings and recommmendations for Royalty Pharma and Merck & Co., Inc., as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Royalty Pharma | 0 | 5 | 4 | 0 | 2.44 |
Merck & Co., Inc. | 0 | 2 | 12 | 0 | 2.86 |
Royalty Pharma presently has a consensus target price of $51.8750, suggesting a potential upside of 22.61%. Merck & Co., Inc. has a consensus target price of $95.9167, suggesting a potential upside of 25.69%. Given Merck & Co., Inc.'s stronger consensus rating and higher probable upside, analysts plainly believe Merck & Co., Inc. is more favorable than Royalty Pharma.
Profitability
This table compares Royalty Pharma and Merck & Co., Inc.'s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Royalty Pharma | N/A | N/A | N/A |
Merck & Co., Inc. | 24.33% | 53.83% | 16.83% |
Earnings and Valuation
This table compares Royalty Pharma and Merck & Co., Inc.'s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Royalty Pharma | N/A | N/A | N/A | N/A | N/A |
Merck & Co., Inc. | $46.84 billion | 4.12 | $9.84 billion | $5.19 | 14.70 |
Merck & Co., Inc. has higher revenue and earnings than Royalty Pharma.
Dividends
Royalty Pharma pays an annual dividend of $0.68 per share and has a dividend yield of 1.6%. Merck & Co., Inc. pays an annual dividend of $2.60 per share and has a dividend yield of 3.4%. Merck & Co., Inc. pays out 50.1% of its earnings in the form of a dividend. Royalty Pharma has increased its dividend for 1 consecutive years and Merck & Co., Inc. has increased its dividend for 1 consecutive years.
Insider & Institutional Ownership
40.9% of Royalty Pharma shares are held by institutional investors. Comparatively, 72.9% of Merck & Co., Inc. shares are held by institutional investors. 2.5% of Royalty Pharma shares are held by insiders. Comparatively, 0.3% of Merck & Co., Inc. shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Summary
Merck & Co., Inc. beats Royalty Pharma on 9 of the 11 factors compared between the two stocks.