Critical Contrast: Perrigo (NYSE:PRGO) and GSK (NYSE:GSK)

GSK (NYSE:GSK) and Perrigo (NYSE:PRGO) are both healthcare companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Analyst Ratings

This is a summary of recent ratings and recommmendations for GSK and Perrigo, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GSK	3	13	3	0	2.00
Perrigo	1	4	1	0	2.00

GSK presently has a consensus price target of $55.48, indicating a potential upside of 13.89%. Perrigo has a consensus price target of $17.50, indicating a potential upside of 9.65%. Given GSK’s higher probable upside, analysts plainly believe GSK is more favorable than Perrigo.

Profitability

This table compares GSK and Perrigo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GSK	14.56%	43.23%	11.60%
Perrigo	-41.85%	11.25%	4.08%

Earnings and Valuation

This table compares GSK and Perrigo”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GSK	$43.07 billion	2.29	$7.54 billion	$3.20	15.22
Perrigo	$4.25 billion	0.52	-$1.43 billion	($12.51)	-1.28

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

Dividends

GSK pays an annual dividend of $1.77 per share and has a dividend yield of 3.6%. Perrigo pays an annual dividend of $1.16 per share and has a dividend yield of 7.3%. GSK pays out 55.3% of its earnings in the form of a dividend. Perrigo pays out -9.3% 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. Perrigo has increased its dividend for 23 consecutive years. Perrigo is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

GSK has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500. Comparatively, Perrigo has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500.

Institutional & Insider Ownership

15.7% of GSK shares are owned by institutional investors. Comparatively, 95.9% of Perrigo shares are owned by institutional investors. 10.0% of GSK shares are owned by insiders. Comparatively, 0.4% of Perrigo shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

GSK beats Perrigo on 11 of the 16 factors compared between the two stocks.

About GSK

GSK plc, together with its subsidiaries, engages in the research, development, and manufacture of vaccines, and specialty and general medicines to prevent and treat disease in the United Kingdom, the United States, and internationally. It operates through two segments, Commercial Operations and Total R&D. The company offers shingles, meningitis, respiratory syncytial virus, flu, polio, influenza, and pandemic vaccines. It also provides medicines for HIV, oncology, respiratory/immunology, and other specialty medicine products, as well as inhaled medicines for asthma and chronic obstructive pulmonary disease, and antibiotics for infections. It has a collaboration agreement with CureVac to develop mRNA-based influenza vaccines, and with Wave Life Sciences and Elsie Biotechnologies, Inc for oligonucleotide platform development. The company was formerly known as GlaxoSmithKline plc and changed its name to GSK plc in May 2022. GSK plc was founded in 1715 and is headquartered in Brentford, the United Kingdom.

About Perrigo

Perrigo Company plc provides over-the-counter health and wellness solutions to enhance individual well-being in the United States, Europe, and internationally. It operates through Consumer Self-Care Americas and Consumer Self-Care International segments. The company develops, manufactures, markets, and distributes self-care consumer products, such as upper respiratory products, including cough suppressants, expectorants, and sinus and allergy relief; nutrition products consisting of infant formulas and nutritional beverages; digestive health products, including antacids, anti-diarrheal, and anti-heartburn; pain and sleep-aids products comprising pain relievers and fever reducers; and oral care products, which include toothbrushes, toothbrush replacement heads, floss, flossers, whitening products, and toothbrush covers. It also offers healthy lifestyle products, such as smoking cessation, well-being, and weight management products; skin care products consisting of dermatological care, scar management, lice treatment, and other products for various skin conditions; women's health products comprising feminine hygiene and contraceptives; vitamins, minerals, and supplements; rare diseases business; and other miscellaneous self-care products. The company sells its products under the Compeed, Dr. Fresh, Firefly, Good Sense, Good Start, Mederma, Nasonex, Plackers, Prevacid24HR, REACH, Rembrandt, Steripod, Opill, Solpadeine, Coldrex, Physiomer, NiQuitin, ACO, ellaOne, Compeed Stops, XLS, Arterin, Davitamon, Apiserum, Abtei, and Nicorette brands. It also offers contract manufacturing services. The company sells its products through retail drug, supermarket, and mass merchandise chains; e-commerce stores; wholesalers; pharmacies; drug and grocery retailers; and para-pharmacies. The company was formerly known as Perrigo Company and changed its name to Perrigo Company plc in December 2013. Perrigo Company plc was founded in 1887 and is headquartered in Dublin, Ireland.