Critical Comparison: Abbott Laboratories (NYSE:ABT) vs. Medtronic (NYSE:MDT)

Abbott Laboratories (NYSE:ABT) and Medtronic (NYSE:MDT) are both large-cap healthcare companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, institutional ownership and profitability.

Volatility & Risk

Abbott Laboratories has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, Medtronic has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Abbott Laboratories	9.75%	17.97%	9.22%
Medtronic	13.93%	14.78%	7.97%

Dividends

Abbott Laboratories pays an annual dividend of $2.52 per share and has a dividend yield of 2.4%. Medtronic pays an annual dividend of $2.88 per share and has a dividend yield of 3.0%. Abbott Laboratories pays out 94.0% 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 pays out 70.9% of its earnings in the form of a dividend. Abbott Laboratories has raised its dividend for 54 consecutive years and Medtronic has raised its dividend for 49 consecutive years. Medtronic is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Abbott Laboratories and Medtronic, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Abbott Laboratories	0	5	21	2	2.89
Medtronic	1	9	18	0	2.61

Abbott Laboratories presently has a consensus price target of $118.32, suggesting a potential upside of 11.28%. Medtronic has a consensus price target of $102.88, suggesting a potential upside of 6.56%. Given Abbott Laboratories’ stronger consensus rating and higher probable upside, analysts clearly believe Abbott Laboratories is more favorable than Medtronic.

Valuation & Earnings

This table compares Abbott Laboratories and Medtronic”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Abbott Laboratories	$44.33 billion	4.15	$6.52 billion	$2.68	39.68
Medtronic	$36.36 billion	3.40	$4.80 billion	$4.06	23.78

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

Insider and Institutional Ownership

75.2% of Abbott Laboratories shares are owned by institutional investors. Comparatively, 82.1% of Medtronic shares are owned by institutional investors. 0.5% of Abbott Laboratories shares are owned by company insiders. Comparatively, 0.3% of Medtronic shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Abbott Laboratories beats Medtronic on 12 of the 18 factors compared between the two stocks.

About Abbott Laboratories

Abbott Laboratories, together with its subsidiaries, discovers, develops, manufactures, and sells health care products worldwide. It operates in four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices. The company provides generic pharmaceuticals for the treatment of pancreatic exocrine insufficiency, irritable bowel syndrome or biliary spasm, intrahepatic cholestasis or depressive symptoms, gynecological disorder, hormone replacement therapy, dyslipidemia, hypertension, hypothyroidism, Ménière’s disease and vestibular vertigo, pain, fever, inflammation, and migraine, as well as provides anti-infective clarithromycin, influenza vaccine, and products to regulate physiological rhythm of the colon. It also offers laboratory and transfusion medicine systems in the areas of immunoassay, clinical chemistry, hematology, and transfusion; molecular diagnostics polymerase chain reaction instrument systems that automate the extraction, purification, and preparation of DNA and RNA from patient samples, and detect and measure infectious agents; point of care systems; cartridges for testing blood gas, chemistry, electrolytes, coagulation, and immunoassay; rapid diagnostics lateral flow testing products; molecular point-of-care testing for HIV, SARS-CoV-2, influenza A and B, RSV, and strep A; cardiometabolic test systems; drug and alcohol test, and remote patient monitoring and consumer self-test systems; and informatics and automation solutions for laboratories. In addition, the company provides pediatric and adult nutritional products; rhythm management, electrophysiology, heart failure, vascular, and structural heart devices for the treatment of cardiovascular diseases; diabetes care products, such as glucose and blood glucose monitoring systems; and neuromodulation devices for the management of chronic pain and movement disorders. Abbott Laboratories was founded in 1888 and is based in North Chicago, Illinois.

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.