Analyzing West Pharmaceutical Services (NYSE:WST) & Precision Optics (NASDAQ:POCI)

West Pharmaceutical Services (NYSE:WST) and Precision Optics (NASDAQ:POCI) are both healthcare companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, profitability, valuation and risk.

Profitability

This table compares West Pharmaceutical Services and Precision Optics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
West Pharmaceutical Services	16.98%	20.11%	14.83%
Precision Optics	-17.03%	-37.47%	-19.96%

Volatility & Risk

West Pharmaceutical Services has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, Precision Optics has a beta of 0.32, suggesting that its share price is 68% less volatile than the S&P 500.

Insider and Institutional Ownership

93.9% of West Pharmaceutical Services shares are held by institutional investors. Comparatively, 13.7% of Precision Optics shares are held by institutional investors. 0.6% of West Pharmaceutical Services shares are held by company insiders. Comparatively, 14.4% of Precision Optics shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for West Pharmaceutical Services and Precision Optics, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
West Pharmaceutical Services	0	3	11	0	2.79
Precision Optics	1	0	0	0	1.00

West Pharmaceutical Services currently has a consensus price target of $379.08, suggesting a potential upside of 4.04%. Given West Pharmaceutical Services’ stronger consensus rating and higher possible upside, equities research analysts clearly believe West Pharmaceutical Services is more favorable than Precision Optics.

Earnings & Valuation

This table compares West Pharmaceutical Services and Precision Optics”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
West Pharmaceutical Services	$3.07 billion	8.34	$493.70 million	$7.81	46.65
Precision Optics	$19.09 million	2.41	-$5.78 million	($0.63)	-6.68

West Pharmaceutical Services has higher revenue and earnings than Precision Optics. Precision Optics is trading at a lower price-to-earnings ratio than West Pharmaceutical Services, indicating that it is currently the more affordable of the two stocks.

Summary

West Pharmaceutical Services beats Precision Optics on 13 of the 14 factors compared between the two stocks.

About West Pharmaceutical Services

West Pharmaceutical Services, Inc. designs, manufactures, and sells containment and delivery systems for injectable drugs and healthcare products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates in two segments, Proprietary Products and Contract-Manufactured Products. The Proprietary Products segment offers stoppers and seals for injectable packaging systems; syringe and cartridge components, including custom solutions for the needs of injectable drug applications, as well as administration systems that enhance the safe delivery of drugs through advanced reconstitution, mixing, and transfer technologies; and films, coatings, washing, and vision inspection and sterilization processes and services to enhance the quality of packaging components. This segment also provides drug containment solutions, including Crystal Zenith, a cyclic olefin polymer in the form of vials, syringes, and cartridges; and self-injection devices; and a range of integrated solutions, including analytical lab services, pre-approval primary packaging support and engineering development, regulatory expertise, and after-sales technical support. This segment serves biologic, generic, and pharmaceutical drug companies. The Contract-Manufactured Products segment is involved in the design, manufacture, and automated assembly of devices used in surgical, diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products. The company serves pharmaceutical, diagnostic, and medical device companies. It sells and distributes its products through its sales force and distribution network, contract sales agents, and regional distributors. West Pharmaceutical Services, Inc. was founded in 1923 and is headquartered in Exton, Pennsylvania.

About Precision Optics

Precision Optics Corporation, Inc. designs, develops, manufactures, and sells specialized optical and illumination systems and related components primarily in the United States and the European Economic Area. It offers medical instrumentation products, including endoscopes and endocouplers, as well as other custom imaging and illumination products, such as Microprecision lenses and micro medical cameras, and 3D endoscopes for use in minimally invasive surgical procedures by hospitals and physicians. The company also provides components and assemblies for industrial and military use. It markets its products to medical device companies. The company was incorporated in 1982 and is based in Gardner, Massachusetts.