Ambu A/S (OTCMKTS:AMBBY) and West Pharmaceutical Services (NYSE:WST) Critical Analysis

Ambu A/S (OTCMKTS:AMBBY) and West Pharmaceutical Services (NYSE:WST) are both healthcare companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.

Risk and Volatility

Ambu A/S has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500. Comparatively, West Pharmaceutical Services has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Valuation & Earnings

This table compares Ambu A/S and West Pharmaceutical Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ambu A/S	$894.37 million	3.06	$90.19 million	$0.30	38.80
West Pharmaceutical Services	$3.07 billion	8.97	$493.70 million	$7.81	50.19

West Pharmaceutical Services has higher revenue and earnings than Ambu A/S. Ambu A/S is trading at a lower price-to-earnings ratio than West Pharmaceutical Services, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Ambu A/S and West Pharmaceutical Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ambu A/S	0	1	0	0	2.00
West Pharmaceutical Services	0	2	12	0	2.86

West Pharmaceutical Services has a consensus target price of $391.17, indicating a potential downside of 0.21%. Given West Pharmaceutical Services’ stronger consensus rating and higher possible upside, analysts plainly believe West Pharmaceutical Services is more favorable than Ambu A/S.

Dividends

Ambu A/S pays an annual dividend of $0.03 per share and has a dividend yield of 0.3%. West Pharmaceutical Services pays an annual dividend of $0.88 per share and has a dividend yield of 0.2%. Ambu A/S pays out 10.0% of its earnings in the form of a dividend. West Pharmaceutical Services pays out 11.3% 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. Ambu A/S is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

93.9% of West Pharmaceutical Services shares are owned by institutional investors. 0.6% of West Pharmaceutical Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Ambu A/S and West Pharmaceutical Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ambu A/S	8.18%	8.49%	6.75%
West Pharmaceutical Services	16.98%	20.11%	14.83%

Summary

West Pharmaceutical Services beats Ambu A/S on 14 of the 16 factors compared between the two stocks.

About Ambu A/S

Ambu A/S develops, produces, and sells medical devices to hospitals, clinics, and rescue services worldwide. The company offers anaesthesia, and patient monitoring and diagnostics products. The company also offers endoscopy products, such as bronchoscopes, rhinolaryngoscopes, duodenoscopes, cystoscopes, and display units; and neurology products, including EEG and EMG electrodes, EMG guided injections, and intraoperative monitoring products. It also provides cardiology products consisting of airway management and anaesthesia products, such as bronchoscopes, video laryngoscopes, double and single lumen tubes, endobronchial blockers, laryngeal and face masks, breathing bags, and resuscitators. In addition, the company offers extrication collars, CPR breathing barriers, video laryngoscopes, and training manikins. The company was founded in 1937 and is headquartered in Ballerup, Denmark.

About West Pharmaceutical Services

West Pharmaceutical Services, Inc. designs, manufactures, and sells containment and delivery systems for injectable drugs and healthcare products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates in two segments, Proprietary Products and Contract-Manufactured Products. The Proprietary Products segment offers stoppers and seals for injectable packaging systems; syringe and cartridge components, including custom solutions for the needs of injectable drug applications, as well as administration systems that enhance the safe delivery of drugs through advanced reconstitution, mixing, and transfer technologies; and films, coatings, washing, and vision inspection and sterilization processes and services to enhance the quality of packaging components. This segment also provides drug containment solutions, including Crystal Zenith, a cyclic olefin polymer in the form of vials, syringes, and cartridges; and self-injection devices; and a range of integrated solutions, including analytical lab services, pre-approval primary packaging support and engineering development, regulatory expertise, and after-sales technical support. This segment serves biologic, generic, and pharmaceutical drug companies. The Contract-Manufactured Products segment is involved in the design, manufacture, and automated assembly of devices used in surgical, diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products. The company serves pharmaceutical, diagnostic, and medical device companies. It sells and distributes its products through its sales force and distribution network, contract sales agents, and regional distributors. West Pharmaceutical Services, Inc. was founded in 1923 and is headquartered in Exton, Pennsylvania.