Head to Head Review: Eli Lilly and (LLY) vs. GlaxoSmithKline PLC (GSK)

Eli Lilly and (NYSE: LLY) and GlaxoSmithKline PLC (NYSE:GSK) are both large-cap medical companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk.

Profitability

This table compares Eli Lilly and and GlaxoSmithKline PLC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Eli Lilly and 11.12% 28.71% 10.74%
GlaxoSmithKline PLC 6.48% 114.93% 9.25%

Analyst Ratings

This is a summary of current recommendations and price targets for Eli Lilly and and GlaxoSmithKline PLC, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eli Lilly and 1 6 11 0 2.56
GlaxoSmithKline PLC 2 6 10 0 2.44

Eli Lilly and currently has a consensus target price of $88.94, indicating a potential upside of 7.64%. GlaxoSmithKline PLC has a consensus target price of $45.67, indicating a potential upside of 13.40%. Given GlaxoSmithKline PLC’s higher possible upside, analysts clearly believe GlaxoSmithKline PLC is more favorable than Eli Lilly and.

Dividends

Eli Lilly and pays an annual dividend of $2.08 per share and has a dividend yield of 2.5%. GlaxoSmithKline PLC pays an annual dividend of $1.97 per share and has a dividend yield of 4.9%. Eli Lilly and pays out 90.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. GlaxoSmithKline PLC pays out 197.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eli Lilly and has raised its dividend for 2 consecutive years.

Risk & Volatility

Eli Lilly and has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500. Comparatively, GlaxoSmithKline PLC has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500.

Insider and Institutional Ownership

75.8% of Eli Lilly and shares are held by institutional investors. Comparatively, 9.3% of GlaxoSmithKline PLC shares are held by institutional investors. 0.2% of Eli Lilly and shares are held by company insiders. Comparatively, 10.0% of GlaxoSmithKline PLC shares are held by company 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 and Earnings

This table compares Eli Lilly and and GlaxoSmithKline PLC’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Eli Lilly and $22.00 billion 3.96 $5.99 billion $2.31 35.77
GlaxoSmithKline PLC $38.56 billion 2.57 $10.54 billion $1.00 40.27

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

Summary

Eli Lilly and beats GlaxoSmithKline PLC on 10 of the 17 factors compared between the two stocks.

Eli Lilly and Company Profile

Eli Lilly and Company is engaged in drug manufacturing business. The Company discovers, develops, manufactures and markets products in two segments: human pharmaceutical products and animal health products. The Company’s human pharmaceutical business segment sells medicines, which are discovered or developed by its scientists. Its animal health business segment operates through the Company’s Elanco division, which develops, manufactures and markets products for both food animals and companion animals. The Company’s human pharmaceutical products include endocrinology products, neuroscience products, oncology products, immunology products and cardiovascular products. The Company’s animal health products segment includes products for food animals and products for companion animals. As of December 31, 2016, the Company manufactured and distributed its products through facilities in the United States, Puerto Rico and 14 other countries.

GlaxoSmithKline PLC Company Profile

GlaxoSmithKline plc is a global healthcare company. The Company operates through three segments: Pharmaceuticals, Vaccines and Consumer Healthcare. The Company focuses on its research across six areas: Respiratory diseases, human immunodeficiency virus (HIV)/infectious diseases, Vaccines, Immuno-inflammation, Oncology and Rare diseases. The Company makes a range of prescription medicines, vaccines and consumer healthcare products. The Pharmaceuticals business discovers, develops and commercializes medicines to treat a range of acute and chronic diseases. The Vaccines business provides vaccines for people of all ages from babies and adolescents to adults and older people. The Consumer Healthcare business develops and markets products in Wellness, Oral health, Nutrition and Skin health categories. Its product portfolio includes Adartrel, Bexsero, Daraprim and Quinvaxem. Its brands include Panadol, abreva, polident and physiogel.

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