Johnson & Johnson (NYSE:JNJ) and Novo Nordisk A/S (NYSE:NVO) are both large-cap medical companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.
Johnson & Johnson pays an annual dividend of $3.60 per share and has a dividend yield of 2.6%. Novo Nordisk A/S pays an annual dividend of $0.65 per share and has a dividend yield of 1.5%. Johnson & Johnson pays out 49.3% of its earnings in the form of a dividend. Novo Nordisk A/S pays out 27.8% 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. Johnson & Johnson has increased its dividend for 55 consecutive years. Johnson & Johnson is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Johnson & Johnson and Novo Nordisk A/S’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Johnson & Johnson||1.70%||32.79%||13.66%|
|Novo Nordisk A/S||35.95%||83.32%||39.88%|
Institutional & Insider Ownership
66.7% of Johnson & Johnson shares are held by institutional investors. Comparatively, 6.7% of Novo Nordisk A/S shares are held by institutional investors. 0.2% of Johnson & Johnson shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Volatility & Risk
Johnson & Johnson has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, Novo Nordisk A/S has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500.
Valuation & Earnings
This table compares Johnson & Johnson and Novo Nordisk A/S’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Johnson & Johnson||$76.45 billion||4.88||$1.30 billion||$7.30||19.05|
|Novo Nordisk A/S||$16.96 billion||6.33||$5.79 billion||$2.34||18.79|
Novo Nordisk A/S has lower revenue, but higher earnings than Johnson & Johnson. Novo Nordisk A/S is trading at a lower price-to-earnings ratio than Johnson & Johnson, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings for Johnson & Johnson and Novo Nordisk A/S, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Johnson & Johnson||1||7||9||0||2.47|
|Novo Nordisk A/S||0||2||4||0||2.67|
Johnson & Johnson presently has a consensus target price of $145.13, suggesting a potential upside of 4.34%. Given Johnson & Johnson’s higher possible upside, analysts clearly believe Johnson & Johnson is more favorable than Novo Nordisk A/S.
Johnson & Johnson beats Novo Nordisk A/S on 10 of the 17 factors compared between the two stocks.
Johnson & Johnson Company Profile
Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the health care field worldwide. Its Consumer segment offers baby care products under the JOHNSON'S brand; oral care products under the LISTERINE brand; beauty products under the AVEENO, CLEAN & CLEAR, DABAO, JOHNSON'S Adult, LE PETITE MARSEILLAIS, NEUTROGENA, RoC, and OGX brands; over-the-counter medicines, including acetaminophen products under the TYLENOL brand; cold, flu, and allergy products under the SUDAFED brand; allergy products under the BENADRYL and ZYRTEC brands; ibuprofen products under the MOTRIN IB brand; and acid reflux products under the PEPCID brand. This segment also provides women's health products, such as sanitary pads under the STAYFREE and CAREFREE brands, and tampons under the o.b. brand; wound care products comprising adhesive bandages under the BAND-AID brand and first aid products under the NEOSPORIN brand. The company's Pharmaceutical segment offers various products in the areas of immunology, infectious diseases and vaccines, neuroscience, oncology, cardiovascular and metabolic, and pulmonary hypertension diseases. Its Medical Devices segment provides orthopedic products; general surgery, biosurgical, endomechanical, and energy products; electrophysiology products to treat cardiovascular disease; sterilization and disinfection products to reduce surgical infection; diabetes care products that include blood glucose monitoring; and vision care products, such as disposable contact lenses and ophthalmic products related to cataract and laser refractive surgery. The company markets its products to general public, retail outlets and distributors, wholesalers, hospitals, and health care professionals for prescription use, as well as for use in the professional fields by physicians, nurses, hospitals, eye care professionals, and clinics. Johnson & Johnson was founded in 1885 and is based in New Brunswick, New Jersey.
Novo Nordisk A/S Company Profile
Novo Nordisk A/S, a healthcare company, engages in the discovery, development, manufacture, and marketing of pharmaceutical products worldwide. It operates in two segments, Diabetes Care and Obesity, and Biopharmaceuticals. The Diabetes Care and Obesity segment provides insulins, GLP-1 and related delivery systems, and oral anti-diabetic drugs and obesity. The Biopharmaceuticals segment offers products in the areas of haemophilia care, growth hormone therapy, and hormone replacement therapy. Novo Nordisk A/S has a research and licensing agreement with DUKE National University Singapore Medical School to develop stem cell-based treatments for chronic heart failure and age-related macular degeneration; and a strategic alliance with Evotec AG to discover and develop small molecule therapies to treat patients suffering from diabetes, obesity, and co-morbidities, as well as has a research collaboration with Kallyope Inc. The company markets and distributes its products through distributors and independent agents. Novo Nordisk A/S was founded in 1925 and is headquartered in Bagsvaerd, Denmark.
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