Contrasting Medtronic (NYSE:MDT) and Terumo (OTCMKTS:TRUMY)

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

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Terumo	0	2	0	0	2.00
Medtronic	0	10	17	0	2.63

Medtronic has a consensus price target of $98.21, suggesting a potential upside of 19.76%. Given Medtronic’s stronger consensus rating and higher possible upside, analysts clearly believe Medtronic is more favorable than Terumo.

Institutional and Insider Ownership

82.1% of Medtronic shares are held by institutional investors. 0.3% of Medtronic shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Terumo	12.09%	9.17%	6.57%
Medtronic	13.20%	14.51%	7.76%

Risk & Volatility

Terumo has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, Medtronic has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Dividends

Terumo pays an annual dividend of $0.11 per share and has a dividend yield of 0.8%. Medtronic pays an annual dividend of $2.88 per share and has a dividend yield of 3.5%. Terumo pays out 18.0% of its earnings in the form of a dividend. Medtronic pays out 77.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Medtronic has increased its dividend for 49 consecutive years. Medtronic is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Terumo and Medtronic”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Terumo	$7.52 billion	2.63	$897.03 million	$0.61	22.00
Medtronic	$36.36 billion	2.89	$4.80 billion	$3.73	21.98

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

Summary

Medtronic beats Terumo on 14 of the 17 factors compared between the two stocks.

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.

About Medtronic

Medtronic plc develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. Its Cardiovascular Portfolio segment offers implantable cardiac pacemakers, cardioverter defibrillators, and cardiac resynchronization therapy devices; cardiac ablation products; insertable cardiac monitor systems; TYRX products; and remote monitoring and patient-centered software. It also provides aortic valves, surgical valve replacement and repair products, endovascular stent grafts and accessories, and transcatheter pulmonary valves; and percutaneous coronary intervention products, percutaneous angioplasty balloons, and products. The company's Medical Surgical Portfolio segment offers surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products, surgical artificial intelligence and robotic-assisted surgery products, hernia mechanical devices, mesh implants, gynecology and lung products, and various therapies to treat diseases, as well as products in the fields of minimally invasive gastrointestinal and hepatologic diagnostics and therapies, patient monitoring, airway management and ventilation therapies, and renal disease. Its Neuroscience Portfolio segment offers products for spinal surgeons; neurosurgeons; neurologists; pain management specialists; anesthesiologists; orthopedic surgeons; urologists; urogynecologists; interventional radiologists; ear, nose, and throat specialists; and systems that incorporate energy surgical instruments. It also provides image-guided surgery and intra-operative imaging systems and robotic guidance systems used in robot assisted spine procedures; and therapies for vasculature in and around the brain. The company's Diabetes Operating Unit segment offers insulin pumps and consumables, continuous glucose monitoring systems, smart insulin pen systems, and consumables and supplies. The company was founded in 1949 and is headquartered in Dublin, Ireland.