Lundbeck (OTCMKTS: HLUYY) and British American Tobacco (NYSE:BTI) are both large-cap medical companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.

Analyst Ratings

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This is a summary of recent ratings and target prices for Lundbeck and British American Tobacco, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lundbeck 1 0 0 0 1.00
British American Tobacco 0 1 9 0 2.90

British American Tobacco has a consensus target price of $78.50, indicating a potential upside of 35.23%. Given British American Tobacco’s stronger consensus rating and higher possible upside, analysts clearly believe British American Tobacco is more favorable than Lundbeck.

Profitability

This table compares Lundbeck and British American Tobacco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lundbeck 15.23% 27.73% 15.39%
British American Tobacco N/A N/A N/A

Risk & Volatility

Lundbeck has a beta of -0.01, suggesting that its stock price is 101% less volatile than the S&P 500. Comparatively, British American Tobacco has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500.

Insider & Institutional Ownership

0.1% of Lundbeck shares are held by institutional investors. Comparatively, 8.8% of British American Tobacco shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Lundbeck and British American Tobacco’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lundbeck $2.62 billion 4.33 $398.58 million $1.66 34.32
British American Tobacco $26.15 billion 4.73 $48.37 billion $3.68 15.77

British American Tobacco has higher revenue and earnings than Lundbeck. British American Tobacco is trading at a lower price-to-earnings ratio than Lundbeck, indicating that it is currently the more affordable of the two stocks.

Dividends

Lundbeck pays an annual dividend of $0.95 per share and has a dividend yield of 1.7%. British American Tobacco pays an annual dividend of $2.02 per share and has a dividend yield of 3.5%. Lundbeck pays out 57.2% of its earnings in the form of a dividend. British American Tobacco pays out 54.9% 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. British American Tobacco is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

British American Tobacco beats Lundbeck on 11 of the 14 factors compared between the two stocks.

About Lundbeck

H. Lundbeck A/S engages in the research, development, production, and sale of pharmaceuticals for the treatment of psychiatric and neurological disorders in Denmark and internationally. Its products include Abilify Maintena, Brintellix/Trintellix, Cipralex/Lexapro, Northera, Onfi, Rexulti, Sabril, and Xenazine. The company offers pharmaceutical products for the treatment of Alzheimer's disease, depression, Parkinson's disease, Schizophrenia, alcohol dependence, anxiety, Bipolar I disorder, Epilepsy, Huntington's disease, and symptomatic neurogenic orthostatic hypotension. H. Lundbeck A/S sells its products to distributors of pharmaceuticals, pharmacies, and hospitals. The company was founded in 1915 and is headquartered in Valby, Denmark.

About British American Tobacco

British American Tobacco p.l.c. provides cigarettes and other tobacco products worldwide. It manufactures vapour and tobacco heating products; oral tobacco and nicotine products, such as snus and moist snuff; cigars; and e-cigarettes. The company offers its products under the Dunhill, Kent, Lucky Strike, Pall Mall, Rothmans, Vogue, Viceroy, Kool, Peter Stuyvesant, Craven A, Benson & Hedges, John Player Gold Leaf, State Express 555, and Shuang Xi brands. The company sells its products to retail outlets. British American Tobacco p.l.c. was founded in 1902 and is headquartered in London, the United Kingdom.

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