Merck & Co., Inc. (NYSE:MRK) and AbbVie (NYSE:ABBV) Financial Survey

Merck & Co., Inc. (NYSE:MRK) and AbbVie (NYSE:ABBV) are both large-cap medical companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Dividends

Merck & Co., Inc. pays an annual dividend of $3.24 per share and has a dividend yield of 4.1%. AbbVie pays an annual dividend of $6.56 per share and has a dividend yield of 3.5%. Merck & Co., Inc. pays out 47.2% of its earnings in the form of a dividend. AbbVie pays out 279.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Merck & Co., Inc. has increased its dividend for 14 consecutive years and AbbVie has increased its dividend for 53 consecutive years. Merck & Co., Inc. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Merck & Co., Inc. and AbbVie”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Merck & Co., Inc.	$64.17 billion	3.11	$17.12 billion	$6.87	11.58
AbbVie	$56.33 billion	5.80	$4.28 billion	$2.35	78.66

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Merck & Co., Inc.	27.27%	43.23%	17.11%
AbbVie	7.31%	412.03%	13.11%

Volatility & Risk

Merck & Co., Inc. has a beta of 0.38, suggesting that its share price is 62% less volatile than the S&P 500. Comparatively, AbbVie has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500.

Insider and Institutional Ownership

76.1% of Merck & Co., Inc. shares are held by institutional investors. Comparatively, 70.2% of AbbVie shares are held by institutional investors. 0.1% of Merck & Co., Inc. shares are held by company insiders. Comparatively, 0.1% of AbbVie shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for Merck & Co., Inc. and AbbVie, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Merck & Co., Inc.	1	12	6	2	2.43
AbbVie	0	8	16	3	2.81

Merck & Co., Inc. presently has a consensus price target of $109.19, indicating a potential upside of 37.20%. AbbVie has a consensus price target of $211.29, indicating a potential upside of 14.30%. Given Merck & Co., Inc.’s higher possible upside, equities analysts clearly believe Merck & Co., Inc. is more favorable than AbbVie.

Summary

Merck & Co., Inc. beats AbbVie on 10 of the 18 factors compared between the two stocks.

About Merck & Co., Inc.

Merck & Co., Inc. is a health care company, which engages in the provision of health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. It operates through the following segments: Pharmaceutical, Animal Health, and Other. The Pharmaceutical segment includes human health pharmaceutical and vaccine products. The Animal Health segment discovers, develops, manufactures, and markets animal health products, such as pharmaceutical and vaccine products, for the prevention, treatment and control of disease in livestock, and companion animal species. The Other segment consists of sales for the non-reportable segments of healthcare services. The company was founded in 1891 and is headquartered in Rahway, NJ.

About AbbVie

AbbVie Inc. discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers Humira, an injection for autoimmune and intestinal Behçet's diseases, and pyoderma gangrenosum; Skyrizi to treat moderate to severe plaque psoriasis, psoriatic disease, and Crohn's disease; Rinvoq to treat rheumatoid and psoriatic arthritis, ankylosing spondylitis, atopic dermatitis, axial spondyloarthropathy, ulcerative colitis, and Crohn's disease; Imbruvica for the treatment of adult patients with blood cancers; Epkinly to treat lymphoma; Elahere to treat cancer; and Venclexta/Venclyxto to treat blood cancers. It also provides facial injectables, plastics and regenerative medicine, body contouring, and skincare products; botox therapeutic; Vraylar for depressive disorder; Duopa and Duodopa to treat advanced Parkinson's disease; Ubrelvy for the acute treatment of migraine in adults; and Qulipta for episodic and chronic migraine. In addition, the company offers Ozurdex for eye diseases; Lumigan/Ganfort and Alphagan/Combigan for the reduction of elevated intraocular pressure in patients with open angle glaucoma or ocular hypertension; Restasis to increase tear production; and other eye care products. Further, it provides Mavyret/Maviret to treat chronic hepatitis C virus genotype 1-6 infection; Creon, a pancreatic enzyme therapy; Lupron to treat advanced prostate cancer, endometriosis and central precocious puberty, and patients with anemia caused by uterine fibroids; Linzess/Constella to treat irritable bowel syndrome with constipation and chronic idiopathic constipation; and Synthroid for hypothyroidism. It has collaborations with Calico Life Sciences LLC; REGENXBIO Inc.; Janssen Biotech, Inc.; and Genentech, Inc., as well as collaboration with Tentarix Biotherapeutics, LP to develop conditionally-active and multi-specific biologics for oncology and immunology. The company was incorporated in 2012 and is headquartered in North Chicago, Illinois.