West Pharmaceutical Services (NYSE: WST) and NuVasive (NASDAQ:NUVA) are both mid-cap medical companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, risk, analyst recommendations, dividends, institutional ownership and profitability.

Profitability

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

Net Margins Return on Equity Return on Assets
West Pharmaceutical Services 12.12% 14.47% 9.71%
NuVasive 6.36% 13.65% 6.17%

Dividends

West Pharmaceutical Services pays an annual dividend of $0.56 per share and has a dividend yield of 0.6%. NuVasive does not pay a dividend. West Pharmaceutical Services pays out 22.3% of its earnings in the form of a dividend. NuVasive has raised its dividend for 24 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings for West Pharmaceutical Services and NuVasive, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
West Pharmaceutical Services 0 2 3 0 2.60
NuVasive 1 2 13 0 2.75

West Pharmaceutical Services currently has a consensus target price of $106.00, indicating a potential upside of 7.53%. NuVasive has a consensus target price of $71.64, indicating a potential upside of 27.14%. Given NuVasive’s stronger consensus rating and higher probable upside, analysts plainly believe NuVasive is more favorable than West Pharmaceutical Services.

Insider and Institutional Ownership

91.8% of West Pharmaceutical Services shares are held by institutional investors. 1.9% of West Pharmaceutical Services shares are held by insiders. Comparatively, 1.2% of NuVasive shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares West Pharmaceutical Services and NuVasive’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
West Pharmaceutical Services $1.51 billion 4.85 $143.60 million $2.51 39.28
NuVasive $962.07 million 2.99 $37.14 million $1.19 47.35

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

Risk and Volatility

West Pharmaceutical Services has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, NuVasive has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500.

Summary

West Pharmaceutical Services beats NuVasive on 12 of the 17 factors compared between the two stocks.

West Pharmaceutical Services Company Profile

West Pharmaceutical Services, Inc. is a manufacturer of packaging components and delivery systems for injectable drugs and healthcare products. The Company’s products include vial containment solutions, prefillable systems, self-injection platforms, cartridge systems and components, reconstitution and transfer systems, intradermal delivery solutions, specialty components, and contract manufacturing and analytical services. The Company’s segments include Proprietary Products and Contract-Manufactured Products. The Proprietary Products segment develops commercial and operational strategies across its global network, with specific emphasis on product offerings to biologic, generic and pharmaceutical drug customers. The Contract-Manufactured Products segment serves as an integrated business focused on the design, manufacture and automated assembly of various devices, primarily for pharmaceutical, diagnostic and medical device customers.

NuVasive Company Profile

Nuvasive, Inc. is a medical device company. The Company focuses on developing minimally-disruptive surgical products and procedurally-integrated solutions for the spine surgery. Its product portfolio focuses on applications for spine fusion surgery, including biologics used to aid in the spinal fusion process. Its principal product offering includes a minimally-disruptive surgical platform called Maximum Access Surgery (MAS). The platform includes its software-driven nerve detection and avoidance systems, including NVM5, and intraoperative monitoring services and support; MaXcess, an integrated split-blade retractor system, and a range of implants and biologics. The platform combines three product categories: its MaXcess retractors, specialized implants and fixation products, and nerve monitoring systems and service offerings that collectively enable surgeons to detect and navigate around nerves, while directing customized access to the spine for implant delivery.

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