Financial Comparison: Terumo (OTCMKTS:TRUMY) vs. ResMed (NYSE:RMD)

ResMed (NYSE:RMD) and Terumo (OTCMKTS:TRUMY) are both large-cap healthcare companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, dividends and profitability.

Dividends

ResMed pays an annual dividend of $2.64 per share and has a dividend yield of 1.1%. Terumo pays an annual dividend of $0.06 per share and has a dividend yield of 0.4%. ResMed pays out 24.0% of its earnings in the form of a dividend. Terumo pays out 8.5% 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. ResMed has increased its dividend for 13 consecutive years. ResMed is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for ResMed and Terumo, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ResMed	0	11	7	0	2.39
Terumo	0	0	0	2	4.00

ResMed presently has a consensus price target of $253.69, suggesting a potential upside of 7.84%. Given ResMed’s higher probable upside, analysts plainly believe ResMed is more favorable than Terumo.

Earnings & Valuation

This table compares ResMed and Terumo”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ResMed	$5.65 billion	5.85	$1.52 billion	$10.98	21.42
Terumo	$7.52 billion	3.12	$897.03 million	$0.71	22.39

ResMed has higher earnings, but lower revenue than Terumo. ResMed is trading at a lower price-to-earnings ratio than Terumo, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

55.0% of ResMed shares are owned by institutional investors. 0.6% of ResMed shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

ResMed has a beta of 0.77, indicating that its share price is 23% less volatile than the S&P 500. Comparatively, Terumo has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500.

Profitability

This table compares ResMed and Terumo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ResMed	27.79%	26.42%	19.43%
Terumo	13.83%	10.44%	7.34%

Summary

ResMed beats Terumo on 12 of the 18 factors compared between the two stocks.

About ResMed

ResMed Inc. develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. The company operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including ApneaLink Air, a portable diagnostic device that measures oximetry, respiratory effort, pulse, nasal flow, and snoring; and NightOwl, a portable, cloud-connected, and disposable diagnostic device that measures AHI based on derived peripheral arterial tone, actigraphy, and oximetry over several nights. The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients’ device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME) to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal. It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies; and MEDIFOX DAN’s software solutions. The company markets its products to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force. ResMed Inc. was founded in 1989 and is headquartered in San Diego, California.

About Terumo

Terumo Corporation engages in the manufacture and sale of medical products and equipment in Japan, Europe, China, the United States, Asia, and internationally. The company operates through three segments: Cardiac and Vascular Company, Medical Care Solutions Company, and Blood and Cell Technologies Company. The Cardiac and Vascular Company segment offers angiographic guidewires, angiographic catheters, introducer sheaths, vascular closure devices, PTCA balloon catheters, coronary stents, self-expanding peripheral stents, intravascular ultrasound systems, imaging catheters, and others; coils, stents, and intrasaccular devices for treating cerebral aneurysm; embolization systems, aspiration catheters, and clot retrievers for treating ischemic stroke and others; oxygenators, cardio-pulmonary bypass systems, and others; and artificial vascular and stent grafts. The Medical Care Solutions Company segment provides syringes, infusion pumps, syringe pumps, infusion lines, I.V. solutions, peritoneal dialysis fluids, pain management and nutritious food products, adhesion barriers, and others; blood glucose monitoring systems, disposable needles for pen-injector, insulin patch pumps, blood pressure monitors, digital thermometers, and others; and contract manufacturing of prefilled syringes, devices to pharmaceutical companies for use in drug kits, such as prefillable syringes, needles for pharmaceutical packaging business, and others. The Blood and Cell Technologies Company segment offers blood bags, component collection systems, automated blood processing systems, pathogen reduction systems, centrifugal apheresis systems, cell expansion systems, and others. The company was formerly known as Sekisen Ken-onki Corporation and changed its name to Terumo Corporation in October 1974. Terumo Corporation was incorporated in 1921 and is headquartered in Tokyo, Japan.