Merck KGaA (OTCMKTS:MKKGY – Get Free Report) and Summit Therapeutics (NASDAQ:SMMT – Get Free Report) are both large-cap medical companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitability.
Insider and Institutional Ownership
0.1% of Merck KGaA shares are owned by institutional investors. Comparatively, 4.6% of Summit Therapeutics shares are owned by institutional investors. 83.5% of Summit Therapeutics shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Valuation & Earnings
This table compares Merck KGaA and Summit Therapeutics”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Merck KGaA | $23.87 billion | 0.91 | $2.95 billion | $2.25 | 14.98 |
| Summit Therapeutics | N/A | N/A | -$1.08 billion | ($1.60) | -8.95 |
Merck KGaA has higher revenue and earnings than Summit Therapeutics. Summit Therapeutics is trading at a lower price-to-earnings ratio than Merck KGaA, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Merck KGaA has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500. Comparatively, Summit Therapeutics has a beta of -1.32, meaning that its stock price is 232% less volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Merck KGaA and Summit Therapeutics, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Merck KGaA | 0 | 5 | 0 | 0 | 2.00 |
| Summit Therapeutics | 2 | 6 | 8 | 1 | 2.47 |
Summit Therapeutics has a consensus price target of $27.23, suggesting a potential upside of 90.12%. Given Summit Therapeutics’ stronger consensus rating and higher possible upside, analysts plainly believe Summit Therapeutics is more favorable than Merck KGaA.
Profitability
This table compares Merck KGaA and Summit Therapeutics’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Merck KGaA | 12.07% | 8.79% | 5.02% |
| Summit Therapeutics | N/A | -291.24% | -243.07% |
Summary
Merck KGaA beats Summit Therapeutics on 8 of the 14 factors compared between the two stocks.
About Merck KGaA
Merck KGaA operates as a science and technology company in Germany. It operates through Life Science, Healthcare, and Electronics segments. The company’s Life Science segment offers tools, chemicals, and equipment for academic labs, biotech, and pharmaceutical manufacturers, as well as industrial sector. This segment provides drug manufacturers with process development expertise and technologies, such as continuous bioprocessing; testing kits and services; reagents and services; testing solutions that analyze air, water, and soil; and testing and tools, as well as products that help test nutritional value and identify quality inconsistencies. Its Healthcare segment discovers, develops, manufacturers, and markets prescription drugs and biopharmaceuticals for the treatment of oncology, neurology and immunology, fertility, endocrinology, as well as cardiovascular, diabetes, thyroid disorders, and multiple sclerosis; general medicines; and injection device and disease monitoring software. The Electronics segment supplies materials for the semiconductor and display industries and surface design, such as delivery systems and services, as well as surface solutions, including cosmetics, effect pigments, and functional solutions. In addition, it has in-licensing agreement with Debiopharm International SA for developing and commercializing drug candidates for the treatment of head and neck cancer; Jiangsu Hengrui Pharmaceuticals Co. Ltd. for developing, manufacturing, and commercializing drug candidates for the treatment of metastatic colorectal cancer; and Abbisko Therapeutics Co. Ltd. for developing and commercializing of drug candidates for the treatment of tenosynovial giant cell tumor, as well as license and collaboration agreement with Merck KGaA to discover two targeted protein degraders against critical oncogenic proteins. The company was founded in 1668 and is headquartered in Darmstadt, Germany. Merck KGaA operates as a subsidiary of E. Merck KGaA.
About Summit Therapeutics
Summit Therapeutics Inc., a biopharmaceutical company, focuses on discovery, development, and commercialization of patient, physician, caregiver, and societal friendly medicinal therapies in the United States, and the United Kingdom. The company’s lead development candidate is Ivonescimab, a bispecific antibody for immunotherapy through blockade of PD-1 with the anti-angiogenesis; and anti-infectives portfolio includes SMT-738, a novel class of precision antibiotics for the treatment of multidrug resistant infections, which primarily includes carbapenem-resistant Enterobacteriaceae infections. It has a collaboration and license agreement with Akeso, Inc. and its affiliates to develop and commercialize ivonescimab, as well as strategic collaboration with The University of Texas MD Anderson Cancer Center for the purpose of accelerating the development of ivonescimab. The company was founded in 2003 and is headquartered in Miami, Florida.
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