Steris Plc (NYSE: STE) and Covidien (NYSE:COV) are both medical companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, earnings, dividends, institutional ownership, profitability, analyst recommendations and risk.

Dividends

Steris Plc pays an annual dividend of $1.24 per share and has a dividend yield of 1.4%. Covidien does not pay a dividend. Steris Plc pays out 88.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Steris Plc has raised its dividend for 7 consecutive years and Covidien has raised its dividend for 8 consecutive years.

Profitability

This table compares Steris Plc and Covidien’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Steris Plc 4.63% 11.39% 6.54%
Covidien 19.02% 20.06% 9.92%

Earnings and Valuation

This table compares Steris Plc and Covidien’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Steris Plc $2.58 billion 2.92 $521.33 million $1.40 63.14
Covidien N/A N/A N/A N/A N/A

Steris Plc has higher revenue and earnings than Covidien.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Steris Plc and Covidien, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Steris Plc 0 2 3 0 2.60
Covidien 0 0 0 0 N/A

Steris Plc presently has a consensus price target of $85.00, indicating a potential downside of 3.85%. Given Steris Plc’s higher possible upside, analysts plainly believe Steris Plc is more favorable than Covidien.

Institutional and Insider Ownership

93.3% of Steris Plc shares are held by institutional investors. 2.6% of Steris Plc shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Steris Plc beats Covidien on 6 of the 11 factors compared between the two stocks.

About Steris Plc

STERIS plc provides infection prevention and other procedural products and services. The Company operates through four segments: Healthcare Products, which offers infection prevention and procedural solutions for healthcare providers, including capital equipment and related maintenance, and installation services, as well as consumables; Healthcare Specialty Services, which provides a range of specialty services for healthcare providers, including hospital sterilization services, instrument and scope repairs, and linen management; Life Sciences, which offers capital equipment and consumable products, and equipment maintenance and specialty services for pharmaceutical manufacturers and research facilities, and Applied Sterilization Technologies, which offers contract sterilization and laboratory services for medical device and pharmaceutical customers and others. Its Corporate and other segment includes the Defense and Industrial business unit.

About Covidien

Covidien Public Limited Company is a healthcare products company. The Company is engaged in the development, manufacture and sale of healthcare products for use in clinical and home settings. The Company’s brands include Kendall, Nellcor, Puritan Bennett and Valleylab, among others. It has a presence in more than 70 countries, with products sold in over 150 countries. The Company’s segments include Medical Devices and United States Medical Supplies. Medical Devices includes marketing of advanced and general surgical solutions, peripheral vascular and neurovascular therapies, patient monitoring products, and airway and ventilation products. United States Medical Supplies includes products, such as nursing care, medical surgical, SharpSafety and original equipment manufacturer (OEM) products. The Company’s products include Surgical Solutions, Vascular Therapies, Respiratory and Patient Care.

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