Critical Analysis: Merck KGaA (OTCMKTS:MKKGY) vs. HUTCHMED (NASDAQ:HCM)

HUTCHMED (NASDAQ:HCM) and Merck KGaA (OTCMKTS:MKKGY) are both healthcare companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, profitability, earnings, risk, institutional ownership and valuation.

Profitability

This table compares HUTCHMED and Merck KGaA’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HUTCHMED	N/A	N/A	N/A
Merck KGaA	11.20%	8.19%	4.61%

Earnings & Valuation

This table compares HUTCHMED and Merck KGaA”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HUTCHMED	$548.51 million	4.00	$456.91 million	N/A	N/A
Merck KGaA	$23.87 billion	0.85	$2.95 billion	$1.94	16.27

Merck KGaA has higher revenue and earnings than HUTCHMED.

Risk and Volatility

HUTCHMED has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500. Comparatively, Merck KGaA has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for HUTCHMED and Merck KGaA, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HUTCHMED	2	2	1	1	2.17
Merck KGaA	0	5	0	1	2.33

HUTCHMED currently has a consensus price target of $14.87, suggesting a potential upside of 18.37%. Given HUTCHMED’s higher possible upside, equities research analysts clearly believe HUTCHMED is more favorable than Merck KGaA.

Institutional and Insider Ownership

8.8% of HUTCHMED shares are held by institutional investors. Comparatively, 0.1% of Merck KGaA shares are held by institutional investors. 3.6% of HUTCHMED shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Merck KGaA beats HUTCHMED on 7 of the 12 factors compared between the two stocks.

About HUTCHMED

HUTCHMED (China) Ltd. is a holding company, which engages in the research and development, manufacture, and sale of pharmaceuticals and health-oriented consumer products. It operates through the Oncology/Immunology and Other Ventures segments. The Oncology/Immunology segment includes the discovery, development, and commercialization of targeted therapies and immunotherapies for the treatment of cancer and immunological diseases. The Other Ventures segment involves the other commercial businesses which include the sales, marketing, manufacture, and distribution of prescription drugs and healthcare products. The company was founded on December 18, 2000 and is headquartered in Hong Kong.

About Merck KGaA

Merck KGaA operates as a science and technology company in Germany. It operates through Life Science, Healthcare, and Electronics segments. The company’s Life Science segment offers tools, chemicals, and equipment for academic labs, biotech, and pharmaceutical manufacturers, as well as industrial sector. This segment provides drug manufacturers with process development expertise and technologies, such as continuous bioprocessing; testing kits and services; reagents and services; testing solutions that analyze air, water, and soil; and testing and tools, as well as products that help test nutritional value and identify quality inconsistencies. Its Healthcare segment discovers, develops, manufacturers, and markets prescription drugs and biopharmaceuticals for the treatment of oncology, neurology and immunology, fertility, endocrinology, as well as cardiovascular, diabetes, thyroid disorders, and multiple sclerosis; general medicines; and injection device and disease monitoring software. The Electronics segment supplies materials for the semiconductor and display industries and surface design, such as delivery systems and services, as well as surface solutions, including cosmetics, effect pigments, and functional solutions. In addition, it has in-licensing agreement with Debiopharm International SA for developing and commercializing drug candidates for the treatment of head and neck cancer; Jiangsu Hengrui Pharmaceuticals Co. Ltd. for developing, manufacturing, and commercializing drug candidates for the treatment of metastatic colorectal cancer; and Abbisko Therapeutics Co. Ltd. for developing and commercializing of drug candidates for the treatment of tenosynovial giant cell tumor, as well as license and collaboration agreement with Merck KGaA to discover two targeted protein degraders against critical oncogenic proteins. The company was founded in 1668 and is headquartered in Darmstadt, Germany. Merck KGaA operates as a subsidiary of E. Merck KGaA.