Comparing West Pharmaceutical Services (NYSE:WST) and Cardinal Health (NYSE:CAH)

West Pharmaceutical Services (NYSE:WST) and Cardinal Health (NYSE:CAH) are both large-cap medical companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, earnings, valuation, analyst recommendations, risk, dividends and profitability.

Risk & Volatility

West Pharmaceutical Services has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500. Comparatively, Cardinal Health has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for West Pharmaceutical Services and Cardinal Health, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
West Pharmaceutical Services	0	3	7	2	2.92
Cardinal Health	0	3	11	0	2.79

West Pharmaceutical Services presently has a consensus price target of $318.56, indicating a potential upside of 21.60%. Cardinal Health has a consensus price target of $165.93, indicating a potential upside of 7.86%. Given West Pharmaceutical Services’ stronger consensus rating and higher probable upside, equities research analysts clearly believe West Pharmaceutical Services is more favorable than Cardinal Health.

Earnings & Valuation

This table compares West Pharmaceutical Services and Cardinal Health”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
West Pharmaceutical Services	$2.89 billion	6.51	$492.70 million	$6.68	39.22
Cardinal Health	$222.58 billion	0.16	$1.56 billion	$6.45	23.85

Cardinal Health has higher revenue and earnings than West Pharmaceutical Services. Cardinal Health is trading at a lower price-to-earnings ratio than West Pharmaceutical Services, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares West Pharmaceutical Services and Cardinal Health’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
West Pharmaceutical Services	16.48%	18.43%	13.67%
Cardinal Health	0.70%	-74.45%	4.14%

Dividends

West Pharmaceutical Services pays an annual dividend of $0.84 per share and has a dividend yield of 0.3%. Cardinal Health pays an annual dividend of $2.04 per share and has a dividend yield of 1.3%. West Pharmaceutical Services pays out 12.6% of its earnings in the form of a dividend. Cardinal Health pays out 31.6% 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. Cardinal Health has raised its dividend for 29 consecutive years. Cardinal Health is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

93.9% of West Pharmaceutical Services shares are owned by institutional investors. Comparatively, 87.2% of Cardinal Health shares are owned by institutional investors. 0.5% of West Pharmaceutical Services shares are owned by insiders. Comparatively, 0.1% of Cardinal Health shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

West Pharmaceutical Services beats Cardinal Health on 13 of the 18 factors compared between the two stocks.

About West Pharmaceutical Services

West Pharmaceutical Services, Inc. designs, manufactures, and sells containment and delivery systems for injectable drugs and healthcare products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates in two segments, Proprietary Products and Contract-Manufactured Products. The Proprietary Products segment offers stoppers and seals for injectable packaging systems; syringe and cartridge components, including custom solutions for the needs of injectable drug applications, as well as administration systems that enhance the safe delivery of drugs through advanced reconstitution, mixing, and transfer technologies; and films, coatings, washing, and vision inspection and sterilization processes and services to enhance the quality of packaging components. This segment also provides drug containment solutions, including Crystal Zenith, a cyclic olefin polymer in the form of vials, syringes, and cartridges; and self-injection devices; and a range of integrated solutions, including analytical lab services, pre-approval primary packaging support and engineering development, regulatory expertise, and after-sales technical support. This segment serves biologic, generic, and pharmaceutical drug companies. The Contract-Manufactured Products segment is involved in the design, manufacture, and automated assembly of devices used in surgical, diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products. The company serves pharmaceutical, diagnostic, and medical device companies. It sells and distributes its products through its sales force and distribution network, contract sales agents, and regional distributors. West Pharmaceutical Services, Inc. was founded in 1923 and is headquartered in Exton, Pennsylvania.

About Cardinal Health

Cardinal Health, Inc. operates as a healthcare services and products company in the United States, Canada, Europe, Asia, and internationally. It provides customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home. The company operates in two segments, Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, and over-the-counter healthcare and consumer products. The segment also provides services to pharmaceutical manufacturers and healthcare providers for specialty pharmaceutical products; operates nuclear pharmacies and radiopharmaceutical manufacturing facilities; repackages generic pharmaceuticals and over-the-counter healthcare products; and provides pharmacy management services to hospitals. The Medical segment manufactures, sources, and distributes Cardinal Health branded medical, surgical, and laboratory products and devices that include exam and surgical gloves; needles, syringe, and sharps disposals; compressions; incontinences; nutritional delivery products; wound care products; single-use surgical drapes, gowns, and apparels; fluid suction and collection systems; urology products; operating room supply products; and electrode product lines. The segment also distributes a range of national brand products, including medical, surgical, and laboratory products; provides supply chain services and solutions to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers; and assembles and sells sterile, and non-sterile procedure kits. The company was incorporated in 1979 and is headquartered in Dublin, Ohio.