Novo Nordisk A/S (NVO) versus Shire PLC (SHPG) Critical Analysis
Novo Nordisk A/S (NYSE: NVO) and Shire PLC (NASDAQ:SHPG) are both large-cap medical companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, risk and dividends.
This is a summary of current ratings and recommmendations for Novo Nordisk A/S and Shire PLC, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Novo Nordisk A/S||3||6||0||0||1.67|
Shire PLC has a consensus price target of $220.91, indicating a potential upside of 44.25%. Given Shire PLC’s stronger consensus rating and higher probable upside, analysts clearly believe Shire PLC is more favorable than Novo Nordisk A/S.
Volatility & Risk
Novo Nordisk A/S has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Shire PLC has a beta of 1.61, indicating that its stock price is 61% more volatile than the S&P 500.
Earnings and Valuation
This table compares Novo Nordisk A/S and Shire PLC’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Novo Nordisk A/S||$18.44 billion||6.48||$8.69 billion||$2.25||21.40|
Novo Nordisk A/S has higher revenue and earnings than Shire PLC. Novo Nordisk A/S is trading at a lower price-to-earnings ratio than Shire PLC, indicating that it is currently the more affordable of the two stocks.
Novo Nordisk A/S pays an annual dividend of $0.82 per share and has a dividend yield of 1.7%. Shire PLC pays an annual dividend of $0.92 per share and has a dividend yield of 0.6%. Novo Nordisk A/S pays out 36.4% of its earnings in the form of a dividend. Shire PLC pays out 41.1% 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. Novo Nordisk A/S has raised its dividend for 20 consecutive years. Novo Nordisk A/S is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Novo Nordisk A/S and Shire PLC’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Novo Nordisk A/S||33.82%||87.49%||40.72%|
Insider & Institutional Ownership
6.0% of Novo Nordisk A/S shares are owned by institutional investors. Comparatively, 19.3% of Shire PLC shares are owned by institutional investors. 0.1% of Novo Nordisk A/S shares are owned by insiders. Comparatively, 2.0% of Shire PLC shares are owned by 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.
Novo Nordisk A/S beats Shire PLC on 9 of the 15 factors compared between the two stocks.
About Novo Nordisk A/S
Novo Nordisk A/S is a global healthcare company engaged in diabetes care. The Company is also engaged in the discovery, development, manufacturing and marketing of pharmaceutical products. The Company operates through two business segments: diabetes and obesity care, and biopharmaceuticals. The Company’s diabetes and obesity care segment covers insulin, GLP-1, other protein-related products, such as glucagon, protein-related delivery systems and needles, and oral anti-diabetic drugs. The Company’s biopharmaceuticals segment covers the therapy areas of hemophilia care, growth hormone therapy and hormone replacement therapy. The Company also offers Saxenda product to treat obesity. It offers a range of products, including NovoLog/NovoRapid; NovoLog Mix/NovoMix; Prandin/NovoNorm; NovoSeven; Norditropin, and Vagifem. As of December 31, 2016, it marketed its products in over 180 countries. Its regional structure consists of two commercial units: North America and International Operations.
About Shire PLC
Shire plc is a biotech company focused on serving people with rare diseases and other specialized conditions. The Company’s segment is engaged in research, development, licensing, manufacturing, marketing, distribution and sale of specialist medicines. It focuses its development resources on projects in various therapeutic areas (TAs), including Neuroscience, Ophthalmology, Hematology, Oncology, Immunology, Gastrointestinal (GI)/Metabolic/Endocrinology Diseases. Its Hematology products include ADVATE (Antihemophilic Factor (Recombinant)), ADYNOVATE/ADYNOVI (Antihemophilic Factor (Recombinant), PEGylated)), RIXUBIS (Coagulation Factor IX (Recombinant)), VONVENDI (von Willebrand factor (Recombinant)) and FEIBA (Anti-Inhibitor Coagulant Complex). Its Genetic Diseases products include CINRYZE (C1 esterase inhibitor (human)), FIRAZYR (icatibant), ELAPRASE (idursulfase), REPLAGAL (agalsidase alfa) and VPRIV (velaglucerase alfa).
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