Arch Therapeutics (NASDAQ: ARTH) and Medtronic PLC (NYSE:MDT) are both healthcare companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Dividends

Medtronic PLC pays an annual dividend of $1.84 per share and has a dividend yield of 2.2%. Arch Therapeutics does not pay a dividend. Medtronic PLC pays out 62.0% of its earnings in the form of a dividend. Arch Therapeutics has increased its dividend for 39 consecutive years.

Valuation & Earnings

This table compares Arch Therapeutics and Medtronic PLC’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Arch Therapeutics N/A N/A N/A N/A N/A
Medtronic PLC $29.93 billion 3.71 $9.19 billion $2.97 27.59

Medtronic PLC has higher revenue and earnings than Arch Therapeutics.

Analyst Ratings

This is a summary of current ratings and target prices for Arch Therapeutics and Medtronic PLC, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arch Therapeutics 0 0 4 0 3.00
Medtronic PLC 0 9 12 0 2.57

Arch Therapeutics presently has a consensus price target of $2.83, indicating a potential upside of 233.33%. Medtronic PLC has a consensus price target of $88.82, indicating a potential upside of 8.41%. Given Arch Therapeutics’ stronger consensus rating and higher probable upside, analysts clearly believe Arch Therapeutics is more favorable than Medtronic PLC.

Insider and Institutional Ownership

80.8% of Medtronic PLC shares are held by institutional investors. 0.3% of Medtronic PLC shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Arch Therapeutics and Medtronic PLC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arch Therapeutics N/A -178.83% -102.46%
Medtronic PLC 13.75% 12.92% 6.56%

Summary

Medtronic PLC beats Arch Therapeutics on 8 of the 12 factors compared between the two stocks.

Arch Therapeutics Company Profile

Arch Therapeutics, Inc. is a development-stage company. The Company operates as a biotechnology company. The Company focuses on developing products to stop bleeding (hemostasis) and control leaking (sealant) during surgery and trauma care. The Company’s technology is based on a self-assembling peptide that creates a physical, mechanical barrier, which could be applied to seal organs or wounds that are leaking blood and other fluids. The Company’s primary product candidates, collectively known as the AC5 Devices (AC5), are designed to achieve hemostasis in surgical procedures. The Company’s product candidates rely on its self-assembling peptide technology and are designed to achieve hemostasis in skin wounds, and minimally invasive and open surgical procedures. The Company focuses on developing other product candidates based on its technology platform for use in a range of indications. As of September 30, 2016, the Company had not generated any revenues.

Medtronic PLC Company Profile

Medtronic Public Limited Company (Medtronic) is a medical technology and services company. The Company develops, manufactures and markets its medical devices and technologies to hospitals, physicians, clinicians and patients in approximately 160 countries. The Company operates in four segments: Cardiac and Vascular Group, Minimally Invasive Technologies Group, Restorative Therapies Group and Diabetes Group. The Cardiac and Vascular Group segment includes Cardiac Rhythm & Heart Failure, Coronary & Structural Heart and Aortic & Peripheral Vascula. Its Minimally Invasive Technologies Group segment includes Surgical Solutions and Patient Monitoring and Recovery. Its Restorative Therapies Group segment includes Spine, Neuromodulation, Surgical Technologies and Neurovascular. Its Diabetes Group segment includes Intensive Insulin Management, Non-Intensive Diabetes Therapies and Diabetes Services & Solutions. The Company’s subsidiaries include Medtronic, Inc. and HeartWare International, Inc.

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