Aceto (NASDAQ: ACET) and Cardinal Health (NYSE:CAH) are both medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, institutional ownership, profitability and analyst recommendations.
Aceto pays an annual dividend of $0.26 per share and has a dividend yield of 3.5%. Cardinal Health pays an annual dividend of $1.85 per share and has a dividend yield of 3.0%. Aceto pays out 21.8% of its earnings in the form of a dividend. Cardinal Health pays out 34.3% 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. Cardinal Health has raised its dividend for 13 consecutive years. Aceto is clearly the better dividend stock, given its higher yield and lower payout ratio.
76.3% of Aceto shares are held by institutional investors. Comparatively, 90.0% of Cardinal Health shares are held by institutional investors. 4.1% of Aceto shares are held by company insiders. Comparatively, 1.0% of Cardinal Health shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This table compares Aceto and Cardinal Health’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings & Valuation
This table compares Aceto and Cardinal Health’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Aceto||$638.32 million||0.35||$11.37 million||$1.19||6.18|
|Cardinal Health||$129.98 billion||0.15||$1.29 billion||$5.40||11.55|
Cardinal Health has higher revenue and earnings than Aceto. Aceto is trading at a lower price-to-earnings ratio than Cardinal Health, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and target prices for Aceto and Cardinal Health, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Aceto presently has a consensus price target of $10.00, indicating a potential upside of 35.87%. Cardinal Health has a consensus price target of $74.50, indicating a potential upside of 19.41%. Given Aceto’s stronger consensus rating and higher possible upside, research analysts clearly believe Aceto is more favorable than Cardinal Health.
Volatility & Risk
Aceto has a beta of 1.59, indicating that its stock price is 59% more volatile than the S&P 500. Comparatively, Cardinal Health has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500.
Cardinal Health beats Aceto on 10 of the 17 factors compared between the two stocks.
Aceto Corporation, together with its subsidiaries, sources, markets, sells, and distributes finished dosage form generics, nutraceutical products, pharmaceutical intermediates and active ingredients, agricultural protection products, and specialty chemicals. The company operates in three segments: Human Health, Pharmaceutical Ingredients, and Performance Chemicals. The Human Health segment supplies raw materials used in the production of nutritional and packaged dietary supplements, including vitamins, amino acids, iron compounds, and bio chemicals used in pharmaceutical and nutritional preparations. This segment is also involved in developing and marketing generic pharmaceutical products. It sells its generic prescription and over the counter pharmaceutical products to wholesalers, chain drug stores, distributors, and mass market merchandisers. The Pharmaceutical Ingredients segment offers active pharmaceutical ingredients and pharmaceutical intermediates to various generic drug companies. The Performance Chemicals segment provides specialty chemicals for use in the manufacture of plastics, surface coatings, cosmetics and personal care products, textiles, and fuels and lubricants, as well as for food, flavor, paper, and film industries; dye and pigment intermediates used in the color-producing industries; and organic intermediates used in the production of agrochemicals. Its raw materials are also used in electronic parts for photo tooling, circuit boards, and production of computer chips. This segment also offers agricultural protection products comprising herbicides, fungicides, and insecticides, which control weed growth and the spread of insects and microorganisms; and sprout inhibitors for potatoes. The company serves various companies in the industrial chemical, agricultural, and human health and pharmaceutical industries primarily in the United States, Europe, and Asia. Aceto Corporation was founded in 1947 and is headquartered in Port Washington, New York.
About Cardinal Health
Cardinal Health, Inc. is a healthcare services and products company. The Company operates through two segments: Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare and consumer products. This segment also operates nuclear pharmacies and cyclotron facilities; provides pharmacy management services to hospitals, as well as medication therapy management and patient outcomes services to hospitals, other healthcare providers and payers, and provides services to healthcare companies. The Medical segment distributes a range of medical, surgical and laboratory products, and provides services to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers. This segment also manufactures, sources and develops its own Cardinal Health brand medical and surgical products. It provides post-acute care management and transition services, and software to hospitals.
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