GSK (NYSE:GSK – Get Free Report) and Merck & Co., Inc. (NYSE:MRK – Get Free Report) are both large-cap medical companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.
Dividends
GSK pays an annual dividend of $1.54 per share and has a dividend yield of 4.0%. Merck & Co., Inc. pays an annual dividend of $3.08 per share and has a dividend yield of 2.8%. GSK pays out 55.8% of its earnings in the form of a dividend. Merck & Co., Inc. pays out 342.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Merck & Co., Inc. has increased its dividend for 13 consecutive years. GSK is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Recommendations
This is a summary of current ratings for GSK and Merck & Co., Inc., as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| GSK | 0 | 4 | 2 | 3 | 2.89 |
| Merck & Co., Inc. | 1 | 3 | 9 | 3 | 2.88 |
Institutional & Insider Ownership
15.7% of GSK shares are owned by institutional investors. Comparatively, 76.1% of Merck & Co., Inc. shares are owned by institutional investors. 10.0% of GSK shares are owned by company insiders. Comparatively, 0.1% of Merck & Co., Inc. shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Risk and Volatility
GSK has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Merck & Co., Inc. has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500.
Profitability
This table compares GSK and Merck & Co., Inc.’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| GSK | 12.87% | 51.48% | 11.41% |
| Merck & Co., Inc. | 21.99% | 40.69% | 15.36% |
Earnings & Valuation
This table compares GSK and Merck & Co., Inc.”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| GSK | $31.45 billion | 2.54 | $6.13 billion | $2.76 | 13.96 |
| Merck & Co., Inc. | $62.48 billion | 4.41 | $365.00 million | $0.90 | 120.78 |
GSK has higher earnings, but lower revenue than Merck & Co., Inc.. GSK is trading at a lower price-to-earnings ratio than Merck & Co., Inc., indicating that it is currently the more affordable of the two stocks.
Summary
GSK beats Merck & Co., Inc. on 9 of the 17 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 Merck & Co., Inc.
Merck & Co., Inc. operates as a healthcare company worldwide. It operates through two segments, Pharmaceutical and Animal Health. The Pharmaceutical segment offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes under the Keytruda, Bridion, Adempas, Lagevrio, Belsomra, Simponi, and Januvia brands, as well as vaccine products consisting of preventive pediatric, adolescent, and adult vaccines under the Gardasil/Gardasil 9, ProQuad, M-M-R II, Varivax, RotaTeq, Live Oral, Vaxneuvance, Pneumovax 23, and Vaqta names. The Animal Health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, and health management solutions and services, as well as digitally connected identification, traceability, and monitoring products. The company serves drug wholesalers and retailers, hospitals, and government agencies; managed health care providers, such as health maintenance organizations, pharmacy benefit managers, and other institutions; and physicians, wholesalers, government entities, veterinarians, distributors, animal producers, farmers, and pet owners. It has development and commercialization agreement for three of Daiichi Sankyo's deruxtecan ADC candidates, which include patritumab deruxtecan, ifinatamab deruxtecan, and raludotatug deruxtecan for the treatment of multiple solid tumors both as monotherapy and/or in combination with other treatments; and AstraZeneca PLC to co-development and co-commercialize AstraZeneca's Lynparza products for multiple cancer types, and Koselugo for multiple indications. The company also has a collaboration agreement with Eisai Co., Ltd., Bayer AG, and Ridgeback Biotherapeutics LP, as well Moderna, Inc. Merck & Co., Inc. was founded in 1891 and is headquartered in Rahway, New Jersey.
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