Abbott Laboratories (NYSE: ABT) and Johnson & Johnson (NYSE:JNJ) 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.
Abbott Laboratories pays an annual dividend of $1.06 per share and has a dividend yield of 2.2%. Johnson & Johnson pays an annual dividend of $3.36 per share and has a dividend yield of 2.5%. Abbott Laboratories pays out 149.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Johnson & Johnson pays out 56.8% of its earnings in the form of a dividend. Abbott Laboratories has increased its dividend for 44 consecutive years and Johnson & Johnson has increased its dividend for 54 consecutive years. Johnson & Johnson is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
70.9% of Abbott Laboratories shares are held by institutional investors. Comparatively, 66.1% of Johnson & Johnson shares are held by institutional investors. 0.8% of Abbott Laboratories shares are held by insiders. Comparatively, 0.2% of Johnson & Johnson 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.
This table compares Abbott Laboratories and Johnson & Johnson’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Johnson & Johnson||22.52%||26.76%||13.19%|
This is a breakdown of current ratings and target prices for Abbott Laboratories and Johnson & Johnson, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Johnson & Johnson||3||7||9||0||2.32|
Abbott Laboratories currently has a consensus price target of $52.83, suggesting a potential upside of 7.19%. Johnson & Johnson has a consensus price target of $132.59, suggesting a potential downside of 0.34%. Given Abbott Laboratories’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Abbott Laboratories is more favorable than Johnson & Johnson.
Valuation and Earnings
This table compares Abbott Laboratories and Johnson & Johnson’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Abbott Laboratories||$23.61 billion||3.63||$5.14 billion||$0.71||69.42|
|Johnson & Johnson||$72.53 billion||4.92||$25.15 billion||$5.92||22.47|
Johnson & Johnson has higher revenue and earnings than Abbott Laboratories. Johnson & Johnson is trading at a lower price-to-earnings ratio than Abbott Laboratories, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Abbott Laboratories has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, Johnson & Johnson has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500.
Johnson & Johnson beats Abbott Laboratories on 10 of the 16 factors compared between the two stocks.
Abbott Laboratories Company Profile
Abbott Laboratories is engaged in the discovery, development, manufacture and sale of a range of healthcare products. The Company operates through four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products and Vascular Products. Its Established Pharmaceutical Products include a range of branded generic pharmaceuticals manufactured around the world and marketed and sold outside the United States. Its Diagnostic Products include a range of diagnostic systems and tests. Its Nutritional Products include a range of pediatric and adult nutritional products. Its Company’s Vascular Products include a range of coronary, endovascular, vessel closure and structural heart devices for the treatment of vascular disease. The Company, through St. Jude Medical, Inc., also offers products, such as rhythm management products, electrophysiology products, heart failure related products, vascular products, structural heart products and neuromodulation products.
Johnson & Johnson Company Profile
Johnson & Johnson is a holding company, which is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. It operates through three segments: Consumer, Pharmaceutical and Medical Devices. Its primary focus is products related to human health and well-being. The Consumer segment includes a range of products used in the baby care, oral care, skin care, over-the-counter pharmaceutical, women’s health and wound care markets. The Pharmaceutical segment is focused on five therapeutic areas, including immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolic diseases. The Medical Devices segment includes a range of products used in the orthopedic, surgery, cardiovascular, diabetes care and vision care fields. Its research facilities are located in the United States, Belgium, Brazil, Canada, China, France, Germany, India, Israel, Japan, the Netherlands, Singapore, Switzerland and the United Kingdom.
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