Aceto (NASDAQ: ACET) and McKesson (NYSE:MCK) are both medical companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.
This is a summary of current ratings for Aceto and McKesson, as provided by MarketBeat.com.
||Strong Buy Ratings
Aceto currently has a consensus target price of $10.00, suggesting a potential upside of 39.08%. McKesson has a consensus target price of $176.07, suggesting a potential upside of 22.32%. Given Aceto’s stronger consensus rating and higher probable upside, research analysts clearly believe Aceto is more favorable than McKesson.
Earnings and Valuation
This table compares Aceto and McKesson’s gross revenue, earnings per share and valuation.
||Earnings Per Share
McKesson has higher revenue and earnings than Aceto. Aceto is trading at a lower price-to-earnings ratio than McKesson, indicating that it is currently the more affordable of the two stocks.
Aceto pays an annual dividend of $0.26 per share and has a dividend yield of 3.6%. McKesson pays an annual dividend of $1.36 per share and has a dividend yield of 0.9%. Aceto pays out 21.8% of its earnings in the form of a dividend. McKesson pays out 11.7% 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 5 consecutive years.
Risk and Volatility
Aceto has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500. Comparatively, McKesson has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500.
Institutional & Insider Ownership
76.3% of Aceto shares are owned by institutional investors. Comparatively, 88.7% of McKesson shares are owned by institutional investors. 4.1% of Aceto shares are owned by company insiders. Comparatively, 1.2% of McKesson shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This table compares Aceto and McKesson’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
McKesson beats Aceto on 11 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.
McKesson Corporation is a healthcare supply chain management solutions, retail pharmacy, community oncology and specialty care, and healthcare information technology company. The Company provides medicines, medical products and healthcare services by partnering with pharmaceutical manufacturers, providers, pharmacies, governments and other organizations in healthcare. It operates through two segments: McKesson Distribution Solutions and McKesson Technology Solutions. The distribution solutions segment distributes branded and generic pharmaceutical drugs and other healthcare-related products internationally and provides practice management, technology, clinical support and business solutions to community-based oncology and other specialty practices. Technology Solutions segment provides software and analytics, network solutions and technology-enabled services.
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