Merck & Co., Inc. (NYSE:MRK) and Anthem (NYSE:ANTM) are both large-cap medical companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, profitability, institutional ownership, earnings, risk and analyst recommendations.
Insider & Institutional Ownership
72.9% of Merck & Co., Inc. shares are owned by institutional investors. Comparatively, 89.4% of Anthem shares are owned by institutional investors. 0.3% of Merck & Co., Inc. shares are owned by insiders. Comparatively, 0.2% of Anthem shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Merck & Co., Inc. and Anthem's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Merck & Co., Inc. | $46.84 billion | 4.24 | $9.84 billion | $5.19 | 15.14 |
Anthem | $104.21 billion | 0.90 | $4.81 billion | $19.44 | 19.64 |
Merck & Co., Inc. has higher earnings, but lower revenue than Anthem. Merck & Co., Inc. is trading at a lower price-to-earnings ratio than Anthem, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Merck & Co., Inc. and Anthem's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Merck & Co., Inc. | 24.33% | 53.83% | 16.83% |
Anthem | 4.22% | 18.45% | 7.27% |
Analyst Ratings
This is a summary of recent recommendations and price targets for Merck & Co., Inc. and Anthem, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Merck & Co., Inc. | 0 | 2 | 11 | 0 | 2.85 |
Anthem | 0 | 3 | 16 | 0 | 2.84 |
Merck & Co., Inc. currently has a consensus target price of $96.2727, suggesting a potential upside of 22.53%. Anthem has a consensus target price of $365.60, suggesting a potential downside of 4.26%. Given Merck & Co., Inc.'s stronger consensus rating and higher possible upside, equities research analysts clearly believe Merck & Co., Inc. is more favorable than Anthem.
Dividends
Merck & Co., Inc. pays an annual dividend of $2.60 per share and has a dividend yield of 3.3%. Anthem pays an annual dividend of $4.52 per share and has a dividend yield of 1.2%. Merck & Co., Inc. pays out 50.1% of its earnings in the form of a dividend. Anthem pays out 23.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Merck & Co., Inc. has increased its dividend for 1 consecutive years and Anthem has increased its dividend for 1 consecutive years.
Volatility and Risk
Merck & Co., Inc. has a beta of 0.43, indicating that its stock price is 57% less volatile than the S&P 500. Comparatively, Anthem has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.
Summary
Merck & Co., Inc. beats Anthem on 9 of the 16 factors compared between the two stocks.