Head-To-Head Survey: McKesson (NYSE:MCK) vs. Becton, Dickinson and Company (NYSE:BDX)

McKesson (NYSE:MCK) and Becton, Dickinson and Company (NYSE:BDX) are both large-cap medical companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, valuation, analyst recommendations, profitability and risk.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for McKesson and Becton, Dickinson and Company, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
McKesson	0	3	10	1	2.86
Becton, Dickinson and Company	0	7	4	0	2.36

McKesson presently has a consensus target price of $719.2727, suggesting a potential upside of 6.90%. Becton, Dickinson and Company has a consensus target price of $211.4444, suggesting a potential upside of 7.95%. Given Becton, Dickinson and Company’s higher possible upside, analysts clearly believe Becton, Dickinson and Company is more favorable than McKesson.

Profitability

This table compares McKesson and Becton, Dickinson and Company’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
McKesson	0.84%	-196.66%	5.66%
Becton, Dickinson and Company	7.51%	16.23%	7.46%

Dividends

McKesson pays an annual dividend of $2.84 per share and has a dividend yield of 0.4%. Becton, Dickinson and Company pays an annual dividend of $4.16 per share and has a dividend yield of 2.1%. McKesson pays out 11.3% of its earnings in the form of a dividend. Becton, Dickinson and Company pays out 74.8% 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. McKesson has increased its dividend for 17 consecutive years and Becton, Dickinson and Company has increased its dividend for 53 consecutive years. Becton, Dickinson and Company is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

McKesson has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500. Comparatively, Becton, Dickinson and Company has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500.

Insider and Institutional Ownership

85.1% of McKesson shares are held by institutional investors. Comparatively, 87.0% of Becton, Dickinson and Company shares are held by institutional investors. 0.1% of McKesson shares are held by insiders. Comparatively, 0.4% of Becton, Dickinson and Company shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares McKesson and Becton, Dickinson and Company”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
McKesson	$359.05 billion	0.23	$3.30 billion	$25.08	26.83
Becton, Dickinson and Company	$20.18 billion	2.78	$1.71 billion	$5.56	35.23

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

Summary

Becton, Dickinson and Company beats McKesson on 10 of the 18 factors compared between the two stocks.

About McKesson

McKesson Corporation provides healthcare services in the United States and internationally. It operates through four segments: U.S. Pharmaceutical, Prescription Technology Solutions (RxTS), Medical-Surgical Solutions, and International. The U.S. Pharmaceutical segment distributes branded, generic, specialty, biosimilar and over-the-counter pharmaceutical drugs, and other healthcare-related products. This segment also offers practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices; and consulting, outsourcing, technological, and other services, as well as sells financial, operational, and clinical solutions to pharmacies. The RxTS segment serves biopharma and life sciences partners, and patients to address medication challenges for patients by working across healthcare; connects patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma companies to deliver innovative solutions to help people get the medicine needed to live healthier lives; and provides prescription price transparency, benefit insight, dispensing support, third-party logistics, and wholesale distribution support services. The Medical-Surgical Solutions segment offers medical-surgical supply distribution, logistics, and other services to healthcare providers, including physician offices, surgery centers, nursing homes, hospital reference labs, and home health care agencies. The International segment provides distribution and services to wholesale, institutional, and retail customers in Europe and Canada. McKesson Corporation was founded in 1833 and is headquartered in Irving, Texas.

About Becton, Dickinson and Company

Becton, Dickinson and Company develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products for healthcare institutions, physicians, life science researchers, clinical laboratories, pharmaceutical industry, and the general public worldwide. The company operates in three segments: BD Medical, BD Life Sciences, and BD Interventional. The BD Medical segment provides peripheral intravenous (IV) and advanced peripheral catheters, central lines, acute dialysis catheters, vascular access technology, vascular care and preparation products, needle-free IV connectors and extensions sets, closed-system drug transfer devices, hazardous drug detections, hypodermic syringes and needles, anesthesia needles and trays, enteral syringes, and sharps disposal systems; IV medication safety and infusion therapy delivery systems, medication compounding workflow systems, automated medication dispensing and supply management systems, and medication inventory optimization and tracking systems; and prefillable drug delivery systems. The BD Life Sciences segment offers specimen and blood collection products; automated blood and tuberculosis culturing, molecular testing, microorganism identification and drug susceptibility, and liquid-based cytology systems, as well as rapid diagnostic assays, microbiology laboratory automation products, and plated media products; and fluorescence-activated cell sorters and analyzers, antibodies and kits, reagent systems, and solutions for single-cell gene expression analysis, as well as clinical oncology, immunological, and transplantation diagnostic/monitoring reagents and analyzers. The BD Interventional segment provides hernia and soft tissue repair, biological and bioresorbable grafts, biosurgery, and other surgical products; surgical infection prevention; peripheral intervention products; and urology and critical care products. The company was founded in 1897 and is headquartered in Franklin Lakes, New Jersey.