Critical Analysis: Embecta (NASDAQ:EMBC) & Sotera Health (NASDAQ:SHC)

Embecta (NASDAQ:EMBC) and Sotera Health (NASDAQ:SHC) are both medical companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Valuation and Earnings

This table compares Embecta and Sotera Health”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Embecta	$1.08 billion	0.17	$95.40 million	$1.90	1.64
Sotera Health	$1.16 billion	4.19	$77.94 million	$0.41	41.71

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

Profitability

This table compares Embecta and Sotera Health’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Embecta	10.73%	-23.96%	14.12%
Sotera Health	9.91%	39.73%	7.05%

Analyst Ratings

This is a summary of current recommendations for Embecta and Sotera Health, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Embecta	3	2	0	0	1.40
Sotera Health	0	3	8	0	2.73

Embecta currently has a consensus target price of $11.00, suggesting a potential upside of 253.70%. Sotera Health has a consensus target price of $20.25, suggesting a potential upside of 18.42%. Given Embecta’s higher possible upside, research analysts plainly believe Embecta is more favorable than Sotera Health.

Risk and Volatility

Embecta has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500. Comparatively, Sotera Health has a beta of 1.79, indicating that its share price is 79% more volatile than the S&P 500.

Institutional & Insider Ownership

93.8% of Embecta shares are owned by institutional investors. Comparatively, 91.0% of Sotera Health shares are owned by institutional investors. 1.3% of Embecta shares are owned by company insiders. Comparatively, 15.4% of Sotera Health shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Sotera Health beats Embecta on 8 of the 14 factors compared between the two stocks.

About Embecta

Embecta Corp., a medical device company, focuses on the provision of various solutions to enhance the health and wellbeing of people living with diabetes. Its products include pen needles, syringes, and safety injection devices, as well as digital applications to assist people with managing patient's diabetes. The company primarily sells its products to wholesalers and distributors in the United States and internationally. Embecta Corp. was founded in 1924 and is headquartered in Parsippany, New Jersey.

About Sotera Health

Sotera Health Company engages in the provision of sterilization, lab testing, and advisory services in the United States and internationally. The company operates through three segments: Sterigenics, Nordion, and Nelson Labs. It provides mission-critical end-to-end sterilization services, including gamma and electron beam irradiation, and ethylene oxide processing, as well as designs, installs, and maintains gamma irradiation systems. The company also provides microbiological and analytical chemistry testing, as well as technical assistance, regulatory consulting, and advisory services. It serves medical devices, pharmaceuticals, food safety, agricultural products, cancer treatment, and high-performance materials industries, as well as commercial, advanced, and specialty application industries. The company was formerly known as Sotera Health Topco, Inc. and changed its name to Sotera Health Company in October 2020. Sotera Health Company was incorporated in 2015 and is headquartered in Broadview Heights, Ohio.