Head-To-Head Review: GSK (NYSE:GSK) vs. Merck & Co., Inc. (NYSE:MRK)

GSK (NYSE:GSK) and Merck & Co., Inc. (NYSE:MRK) are both large-cap medical companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Volatility and Risk

GSK has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, Merck & Co., Inc. has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500.

Dividends

GSK pays an annual dividend of $1.54 per share and has a dividend yield of 3.9%. Merck & Co., Inc. pays an annual dividend of $3.08 per share and has a dividend yield of 2.8%. GSK pays out 55.8% of its earnings in the form of a dividend. Merck & Co., Inc. pays out 342.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Merck & Co., Inc. has increased its dividend for 13 consecutive years. GSK is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares GSK and Merck & Co., Inc.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GSK	12.87%	51.48%	11.41%
Merck & Co., Inc.	21.99%	40.69%	15.36%

Earnings & Valuation

This table compares GSK and Merck & Co., Inc.”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GSK	$31.45 billion	2.58	$6.13 billion	$2.76	14.21
Merck & Co., Inc.	$62.48 billion	4.48	$365.00 million	$0.90	122.70

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

Institutional and Insider Ownership

15.7% of GSK shares are held by institutional investors. Comparatively, 76.1% of Merck & Co., Inc. shares are held by institutional investors. 10.0% of GSK shares are held by insiders. Comparatively, 0.1% of Merck & Co., Inc. shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations for GSK and Merck & Co., Inc., as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GSK	0	4	2	3	2.89
Merck & Co., Inc.	1	2	9	3	2.93

GSK currently has a consensus price target of $50.00, suggesting a potential upside of 27.52%. Merck & Co., Inc. has a consensus price target of $133.00, suggesting a potential upside of 20.44%. Given GSK’s higher possible upside, equities research analysts clearly believe GSK is more favorable than Merck & Co., Inc..

Summary

Merck & Co., Inc. beats GSK on 9 of the 17 factors compared between the two stocks.

About GSK

GSK plc, together with its subsidiaries, engages in the research, development, and manufacture of vaccines, and specialty and general medicines to prevent and treat disease in the United Kingdom, the United States, and internationally. It operates through two segments, Commercial Operations and Total R&D. The company offers shingles, meningitis, respiratory syncytial virus, flu, polio, influenza, and pandemic vaccines. It also provides medicines for HIV, oncology, respiratory/immunology, and other specialty medicine products, as well as inhaled medicines for asthma and chronic obstructive pulmonary disease, and antibiotics for infections. It has a collaboration agreement with CureVac to develop mRNA-based influenza vaccines, and with Wave Life Sciences and Elsie Biotechnologies, Inc for oligonucleotide platform development. The company was formerly known as GlaxoSmithKline plc and changed its name to GSK plc in May 2022. GSK plc was founded in 1715 and is headquartered in Brentford, the United Kingdom.

About Merck & Co., Inc.

Merck & Co., Inc. operates as a healthcare company worldwide. It operates through two segments, Pharmaceutical and Animal Health. The Pharmaceutical segment offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes under the Keytruda, Bridion, Adempas, Lagevrio, Belsomra, Simponi, and Januvia brands, as well as vaccine products consisting of preventive pediatric, adolescent, and adult vaccines under the Gardasil/Gardasil 9, ProQuad, M-M-R II, Varivax, RotaTeq, Live Oral, Vaxneuvance, Pneumovax 23, and Vaqta names. The Animal Health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, and health management solutions and services, as well as digitally connected identification, traceability, and monitoring products. The company serves drug wholesalers and retailers, hospitals, and government agencies; managed health care providers, such as health maintenance organizations, pharmacy benefit managers, and other institutions; and physicians, wholesalers, government entities, veterinarians, distributors, animal producers, farmers, and pet owners. It has development and commercialization agreement for three of Daiichi Sankyo's deruxtecan ADC candidates, which include patritumab deruxtecan, ifinatamab deruxtecan, and raludotatug deruxtecan for the treatment of multiple solid tumors both as monotherapy and/or in combination with other treatments; and AstraZeneca PLC to co-development and co-commercialize AstraZeneca's Lynparza products for multiple cancer types, and Koselugo for multiple indications. The company also has a collaboration agreement with Eisai Co., Ltd., Bayer AG, and Ridgeback Biotherapeutics LP, as well Moderna, Inc. Merck & Co., Inc. was founded in 1891 and is headquartered in Rahway, New Jersey.