Terumo (OTCMKTS:TRUMY) and Stryker (NYSE:SYK) Critical Contrast

Terumo (OTCMKTS:TRUMY) and Stryker (NYSE:SYK) are both large-cap healthcare companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, institutional ownership, valuation, earnings and dividends.

Earnings and Valuation

This table compares Terumo and Stryker”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Terumo	$7.52 billion	2.84	$897.03 million	$0.71	20.42
Stryker	$25.12 billion	4.25	$3.25 billion	$9.65	28.81

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

Volatility and Risk

Terumo has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, Stryker has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500.

Dividends

Terumo pays an annual dividend of $0.11 per share and has a dividend yield of 0.8%. Stryker pays an annual dividend of $3.52 per share and has a dividend yield of 1.3%. Terumo pays out 15.5% of its earnings in the form of a dividend. Stryker pays out 36.5% 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. Stryker has raised its dividend for 32 consecutive years. Stryker is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

77.1% of Stryker shares are owned by institutional investors. 4.6% of Stryker shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Terumo and Stryker’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Terumo	13.83%	10.44%	7.34%
Stryker	14.43%	23.63%	11.39%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Terumo and Stryker, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Terumo	0	1	0	1	3.00
Stryker	0	5	18	0	2.78

Stryker has a consensus target price of $374.42, indicating a potential upside of 34.69%. Given Stryker’s higher possible upside, analysts clearly believe Stryker is more favorable than Terumo.

Summary

Stryker beats Terumo on 15 of the 18 factors compared between the two stocks.

About Terumo

Terumo Corporation engages in the manufacture and sale of medical products and equipment in Japan, Europe, China, the United States, Asia, and internationally. The company operates through three segments: Cardiac and Vascular Company, Medical Care Solutions Company, and Blood and Cell Technologies Company. The Cardiac and Vascular Company segment offers angiographic guidewires, angiographic catheters, introducer sheaths, vascular closure devices, PTCA balloon catheters, coronary stents, self-expanding peripheral stents, intravascular ultrasound systems, imaging catheters, and others; coils, stents, and intrasaccular devices for treating cerebral aneurysm; embolization systems, aspiration catheters, and clot retrievers for treating ischemic stroke and others; oxygenators, cardio-pulmonary bypass systems, and others; and artificial vascular and stent grafts. The Medical Care Solutions Company segment provides syringes, infusion pumps, syringe pumps, infusion lines, I.V. solutions, peritoneal dialysis fluids, pain management and nutritious food products, adhesion barriers, and others; blood glucose monitoring systems, disposable needles for pen-injector, insulin patch pumps, blood pressure monitors, digital thermometers, and others; and contract manufacturing of prefilled syringes, devices to pharmaceutical companies for use in drug kits, such as prefillable syringes, needles for pharmaceutical packaging business, and others. The Blood and Cell Technologies Company segment offers blood bags, component collection systems, automated blood processing systems, pathogen reduction systems, centrifugal apheresis systems, cell expansion systems, and others. The company was formerly known as Sekisen Ken-onki Corporation and changed its name to Terumo Corporation in October 1974. Terumo Corporation was incorporated in 1921 and is headquartered in Tokyo, Japan.

About Stryker

Stryker Corporation operates as a medical technology company. The company operates through two segments, MedSurg and Neurotechnology, and Orthopaedics and Spine. The Orthopaedics and Spine segment provides implants for use in total joint replacements, such as hip, knee and shoulder, and trauma and extremities surgeries. This segment also offers spinal implant products comprising cervical and thoracolumbar systems that include fixation, minimally invasive and interbody systems used in spinal injury, complex spine and degenerative therapies. The MedSurg and Neurotechnology segment offers surgical equipment, and surgical navigation systems, endoscopic and communications systems, patient handling, emergency medical equipment and intensive care disposable products, reprocessed and remanufactured medical devices, clinical communication and workflow solutions, and other medical device products that are used in various medical specialties, as well as patient and caregiver safety technologies. This segment also provides neurosurgical, neurovascular and craniomaxillofacial implant products, which include products used for minimally invasive endovascular procedures; products for brain and open skull based surgical procedures; orthobiologic and biosurgery products, such as synthetic bone grafts and vertebral augmentation products; minimally invasive products for the treatment of acute ischemic and hemorrhagic stroke; and craniomaxillofacial implant products, including cranial, maxillofacial, and chest wall devices, as well as dural substitutes and sealants. The company sells its products to doctors, hospitals, and other healthcare facilities through company-owned subsidiaries and branches, as well as third-party dealers and distributors in approximately 75 countries. Stryker Corporation was founded in 1941 and is headquartered in Portage, Michigan.