Financial Analysis: Abbott Laboratories (NYSE:ABT) versus Terumo (OTCMKTS:TRUMY)

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

Valuation and Earnings

This table compares Abbott Laboratories and Terumo”s top-line 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	3.63	$6.52 billion	$3.57	25.90
Terumo	$6.80 billion	2.77	$772.05 million	$0.58	22.05

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

Dividends

Abbott Laboratories pays an annual dividend of $2.52 per share and has a dividend yield of 2.7%. Terumo pays an annual dividend of $0.13 per share and has a dividend yield of 1.0%. Abbott Laboratories pays out 70.6% of its earnings in the form of a dividend. Terumo pays out 22.4% 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. Abbott Laboratories has raised its dividend for 54 consecutive years. Abbott Laboratories is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

75.2% of Abbott Laboratories shares are held by institutional investors. 0.5% of Abbott Laboratories shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Abbott Laboratories	13.90%	17.71%	10.76%
Terumo	11.74%	9.01%	6.61%

Analyst Ratings

This is a summary of recent recommendations and price targets for Abbott Laboratories and Terumo, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Abbott Laboratories	0	5	19	2	2.88
Terumo	0	2	0	0	2.00

Abbott Laboratories presently has a consensus target price of $119.43, suggesting a potential upside of 29.18%. Given Abbott Laboratories’ stronger consensus rating and higher possible upside, research analysts clearly believe Abbott Laboratories is more favorable than Terumo.

Risk & Volatility

Abbott Laboratories has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500. Comparatively, Terumo has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Summary

Abbott Laboratories beats Terumo on 17 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 Terumo

Terumo Corporation engages in the manufacture and sale of medical products and equipment in Japan, Europe, China, the United States, Asia, and internationally. The company operates through three segments: Cardiac and Vascular Company, Medical Care Solutions Company, and Blood and Cell Technologies Company. The Cardiac and Vascular Company segment offers angiographic guidewires, angiographic catheters, introducer sheaths, vascular closure devices, PTCA balloon catheters, coronary stents, self-expanding peripheral stents, intravascular ultrasound systems, imaging catheters, and others; coils, stents, and intrasaccular devices for treating cerebral aneurysm; embolization systems, aspiration catheters, and clot retrievers for treating ischemic stroke and others; oxygenators, cardio-pulmonary bypass systems, and others; and artificial vascular and stent grafts. The Medical Care Solutions Company segment provides syringes, infusion pumps, syringe pumps, infusion lines, I.V. solutions, peritoneal dialysis fluids, pain management and nutritious food products, adhesion barriers, and others; blood glucose monitoring systems, disposable needles for pen-injector, insulin patch pumps, blood pressure monitors, digital thermometers, and others; and contract manufacturing of prefilled syringes, devices to pharmaceutical companies for use in drug kits, such as prefillable syringes, needles for pharmaceutical packaging business, and others. The Blood and Cell Technologies Company segment offers blood bags, component collection systems, automated blood processing systems, pathogen reduction systems, centrifugal apheresis systems, cell expansion systems, and others. The company was formerly known as Sekisen Ken-onki Corporation and changed its name to Terumo Corporation in October 1974. Terumo Corporation was incorporated in 1921 and is headquartered in Tokyo, Japan.