Organon & Co. (NYSE:OGN) versus Labcorp (NYSE:LH) Critical Review

Labcorp (NYSE:LH) and Organon & Co. (NYSE:OGN) are both medical companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, valuation, risk, earnings, dividends, analyst recommendations and institutional ownership.

Profitability

This table compares Labcorp and Organon & Co.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Labcorp	6.28%	16.16%	7.62%
Organon & Co.	3.01%	122.01%	6.74%

Dividends

Labcorp pays an annual dividend of $2.88 per share and has a dividend yield of 1.0%. Organon & Co. pays an annual dividend of $0.08 per share and has a dividend yield of 1.2%. Labcorp pays out 27.5% of its earnings in the form of a dividend. Organon & Co. pays out 11.3% 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. Organon & Co. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Labcorp has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500. Comparatively, Organon & Co. has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500.

Institutional and Insider Ownership

95.9% of Labcorp shares are held by institutional investors. Comparatively, 77.4% of Organon & Co. shares are held by institutional investors. 0.8% of Labcorp shares are held by company insiders. Comparatively, 2.0% of Organon & Co. shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Labcorp and Organon & Co.”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Labcorp	$13.95 billion	1.63	$876.50 million	$10.46	26.37
Organon & Co.	$6.22 billion	0.28	$187.00 million	$0.71	9.45

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

Analyst Recommendations

This is a summary of current ratings and target prices for Labcorp and Organon & Co., as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Labcorp	0	3	9	0	2.75
Organon & Co.	5	1	0	1	1.57

Labcorp currently has a consensus target price of $304.82, indicating a potential upside of 10.52%. Organon & Co. has a consensus target price of $8.50, indicating a potential upside of 26.68%. Given Organon & Co.’s higher probable upside, analysts clearly believe Organon & Co. is more favorable than Labcorp.

Summary

Labcorp beats Organon & Co. on 11 of the 17 factors compared between the two stocks.

About Labcorp

Labcorp Holdings, Inc. engages in providing medical testing services. The company was founded on April 16, 2024 and is headquartered in Burlington, NC.

About Organon & Co.

Organon & Co. is a science based global pharmaceutical company, which develops and delivers innovative health solutions through a portfolio of prescription therapies within women’s health, biosimilars and established brands. The company was founded on March 11, 2020, and is headquartered in Jersey City, NJ.