Novartis (NYSE:NVS) vs. Johnson & Johnson (NYSE:JNJ) Head to Head Comparison

Johnson & Johnson (NYSE:JNJ) and Novartis (NYSE:NVS) are both large-cap medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, risk and profitability.

Dividends

Johnson & Johnson pays an annual dividend of $5.20 per share and has a dividend yield of 3.5%. Novartis pays an annual dividend of $2.60 per share and has a dividend yield of 2.2%. Johnson & Johnson pays out 57.8% of its earnings in the form of a dividend. Novartis pays out 40.6% 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. Johnson & Johnson has increased its dividend for 64 consecutive years. Johnson & Johnson is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Johnson & Johnson and Novartis’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Johnson & Johnson	24.42%	33.46%	13.30%
Novartis	24.70%	39.44%	16.43%

Earnings & Valuation

This table compares Johnson & Johnson and Novartis”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Johnson & Johnson	$88.82 billion	4.06	$14.07 billion	$8.99	16.66
Novartis	$50.32 billion	4.85	$11.94 billion	$6.40	18.07

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

Insider & Institutional Ownership

69.6% of Johnson & Johnson shares are held by institutional investors. Comparatively, 13.1% of Novartis shares are held by institutional investors. 0.2% of Johnson & Johnson shares are held by insiders. Comparatively, 0.0% of Novartis shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Johnson & Johnson has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500. Comparatively, Novartis has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Johnson & Johnson and Novartis, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Johnson & Johnson	0	11	7	2	2.55
Novartis	3	6	1	1	2.00

Johnson & Johnson currently has a consensus price target of $170.88, indicating a potential upside of 14.07%. Novartis has a consensus price target of $123.38, indicating a potential upside of 6.71%. Given Johnson & Johnson’s stronger consensus rating and higher probable upside, research analysts clearly believe Johnson & Johnson is more favorable than Novartis.

Summary

Johnson & Johnson beats Novartis on 11 of the 18 factors compared between the two stocks.

About Johnson & Johnson

Johnson & Johnson is a holding company, which engages in the research, development, manufacture, and sale of products in the healthcare field. It operates through the Innovative Medicine and MedTech segments. The Innovative Medicine segment focuses on immunology, infectious diseases, neuroscience, oncology, cardiovascular and metabolism, and pulmonary hypertension. The MedTech segment includes a portfolio of products used in the interventional solutions, orthopaedics, surgery, and vision categories. The company was founded by Robert Wood Johnson I, James Wood Johnson, and Edward Mead Johnson Sr. in 1887 and is headquartered in New Brunswick, NJ.

About Novartis

Novartis AG engages in the research, development, manufacture, and marketing of healthcare products in Switzerland and internationally. The company offers prescription medicines for patients and physicians. It focuses on therapeutic areas, such as cardiovascular, renal and metabolic, immunology, neuroscience, and oncology, as well as ophthalmology and hematology. Novartis AG has a license and collaboration agreement with Alnylam Pharmaceuticals to develop, manufacture, and commercialize inclisiran, a therapy to reduce LDL cholesterol; and Dawn Health for the development and commercialization of Ekiva, a digital solution designed for people living with Paroxysmal Nocturnal Hemoglobinuria. The company was incorporated in 1996 and is headquartered in Basel, Switzerland.