Critical Review: Koninklijke Philips N.V. (PHG) and Alere (ALR)
Koninklijke Philips N.V. (NYSE: PHG) and Alere (NYSE:ALR) are both mid-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, earnings, profitabiliy, dividends, valuation and analyst recommendations.
This table compares Koninklijke Philips N.V. and Alere’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Koninklijke Philips N.V.||6.67%||9.80%||4.06%|
Earnings & Valuation
This table compares Koninklijke Philips N.V. and Alere’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Koninklijke Philips N.V.||$28.28 billion||1.17||$3.69 billion||$1.95||18.47|
|Alere||$2.38 billion||1.85||$318.64 million||($2.45)||-20.55|
Koninklijke Philips N.V. has higher revenue and earnings than Alere. Alere is trading at a lower price-to-earnings ratio than Koninklijke Philips N.V., indicating that it is currently the more affordable of the two stocks.
This is a summary of current recommendations and price targets for Koninklijke Philips N.V. and Alere, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Koninklijke Philips N.V.||0||5||4||0||2.44|
Koninklijke Philips N.V. currently has a consensus target price of $33.50, suggesting a potential downside of 6.97%. Alere has a consensus target price of $49.60, suggesting a potential downside of 1.49%. Given Alere’s higher possible upside, analysts plainly believe Alere is more favorable than Koninklijke Philips N.V..
Insider and Institutional Ownership
7.2% of Koninklijke Philips N.V. shares are held by institutional investors. Comparatively, 90.7% of Alere shares are held by institutional investors. 3.7% of Alere shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Koninklijke Philips N.V. pays an annual dividend of $0.73 per share and has a dividend yield of 2.0%. Alere does not pay a dividend. Koninklijke Philips N.V. pays out 37.4% of its earnings in the form of a dividend. Alere has increased its dividend for 4 consecutive years.
Risk and Volatility
Koninklijke Philips N.V. has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500. Comparatively, Alere has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500.
Koninklijke Philips N.V. beats Alere on 9 of the 17 factors compared between the two stocks.
About Koninklijke Philips N.V.
Koninklijke Philips N.V. is a health technology company. The Company’s segments include Personal Health businesses, Diagnosis & Treatment businesses, Connected Care & Health Informatics businesses, and Lighting. The Company’s Personal Health businesses segment is engaged in the health continuum, delivering integrated, connected solutions that support healthier lifestyles and those living with chronic disease. The Company’s Diagnosis & Treatment businesses segment delivers precision medicine and treatment, and therapy. The Company’s Connected Care & Health Informatics businesses segment provides consumers, care givers and clinicians with digital solutions that facilitate care by enabling precision medicine and population health management. The Company’s Philips Lighting is engaged in the development, manufacture and application of lighting products, systems and services. The Company is the parent company of the Philips Group (Philips).
Alere Inc. is a provider of health information through diagnostic tests. The Company’s segments include professional diagnostics, consumer diagnostics, and corporate and other. The professional diagnostics segment includes an array of diagnostic test products and other in vitro diagnostic tests marketed to medical professionals and laboratories for detection of diseases and conditions within its areas of focus. The consumer diagnostics segment consists primarily of manufacturing operations related to its role as the exclusive manufacturer of products for SPD Swiss Precision Diagnostics (SPD), its joint venture with The Procter & Gamble Company (P&G). The Company’s professional diagnostic solutions allow patients and their healthcare providers to work together to manage patients’ conditions over the continuum of care, from the hospital to home. The Company offers lines of drugs-of-abuse tests, reagent systems and laboratory testing options.
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