Merck & (MRK) vs. Akorn (AKRX) Financial Survey

Merck & (NYSE: MRK) and Akorn (NASDAQ:AKRX) are both mid-cap medical companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Merck & and Akorn, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Merck & 1 8 8 0 2.41
Akorn 1 8 1 0 2.00

Merck & currently has a consensus target price of $66.64, indicating a potential upside of 20.73%. Akorn has a consensus target price of $30.14, indicating a potential downside of 9.75%. Given Merck &’s stronger consensus rating and higher probable upside, analysts plainly believe Merck & is more favorable than Akorn.

Dividends

Merck & pays an annual dividend of $1.88 per share and has a dividend yield of 3.4%. Akorn does not pay a dividend. Merck & pays out 112.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Akorn has increased its dividend for 5 consecutive years.

Institutional and Insider Ownership

73.0% of Merck & shares are held by institutional investors. Comparatively, 74.7% of Akorn shares are held by institutional investors. 0.3% of Merck & shares are held by company insiders. Comparatively, 28.2% of Akorn shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Merck & and Akorn’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Merck & 11.60% 27.08% 11.41%
Akorn 7.79% 15.14% 6.51%

Volatility and Risk

Merck & has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, Akorn has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500.

Valuation & Earnings

This table compares Merck & and Akorn’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Merck & $39.81 billion 3.78 $3.92 billion $1.67 33.05
Akorn $1.12 billion 3.74 $184.24 million $0.99 33.74

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

Summary

Merck & beats Akorn on 11 of the 17 factors compared between the two stocks.

Merck & Company Profile

Merck & Co., Inc. is a global healthcare company. The Company offers health solutions through its prescription medicines, vaccines, biologic therapies and animal health products. It operates through four segments: Pharmaceutical, Animal Health, Healthcare Services and Alliances. The Company’s Pharmaceutical segment includes human health pharmaceutical and vaccine products marketed either directly by the Company or through joint ventures. Human health pharmaceutical products consist of therapeutic and preventive agents, generally sold by prescription, for the treatment of human disorders. The Company sells its human health pharmaceutical products primarily to drug wholesalers and retailers, hospitals, government agencies and managed healthcare providers, such as health maintenance organizations, pharmacy benefit managers and other institutions. Vaccine products consist of preventive pediatric, adolescent and adult vaccines, primarily administered at physician offices.

Akorn Company Profile

Akorn Inc. (Akorn), together with its subsidiaries, is a specialty generic pharmaceutical company that develops, manufactures and markets generic and branded prescription pharmaceuticals, as well as private-label over-the-counter (OTC) consumer health products and animal health pharmaceuticals. The Company operates through two segments: Prescription Pharmaceuticals and the Consumer Health. The Prescription Pharmaceuticals segment consists of generic and branded prescription pharmaceuticals in a range of dosage forms, including sterile ophthalmics, injectables and inhalants and non-sterile oral liquids, topicals and nasal sprays and otics. The Consumer Health segment consists of branded and private-label OTC products and animal health products dispensed by veterinary professionals. Its branded and private-label OTC products are focused on ophthalmics, including a dry eye treatment TheraTears Therapy for Your Eyes.

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