Eli Lilly and Company (NYSE:LLY) vs. Novo Nordisk A/S (NYSE:NVO) Critical Contrast

Eli Lilly and Company (NYSE:LLY) and Novo Nordisk A/S (NYSE:NVO) are both large-cap medical companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Profitability

This table compares Eli Lilly and Company and Novo Nordisk A/S’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eli Lilly and Company	25.91%	92.72%	16.89%
Novo Nordisk A/S	35.60%	78.64%	24.51%

Dividends

Eli Lilly and Company pays an annual dividend of $6.00 per share and has a dividend yield of 0.8%. Novo Nordisk A/S pays an annual dividend of $0.82 per share and has a dividend yield of 1.5%. Eli Lilly and Company pays out 39.2% of its earnings in the form of a dividend. Novo Nordisk A/S pays out 22.5% 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. Eli Lilly and Company has raised its dividend for 11 consecutive years. Novo Nordisk A/S is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent recommendations and price targets for Eli Lilly and Company and Novo Nordisk A/S, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eli Lilly and Company	0	8	14	1	2.70
Novo Nordisk A/S	1	12	3	0	2.13

Eli Lilly and Company presently has a consensus price target of $950.17, indicating a potential upside of 30.81%. Novo Nordisk A/S has a consensus price target of $81.00, indicating a potential upside of 46.88%. Given Novo Nordisk A/S’s higher possible upside, analysts clearly believe Novo Nordisk A/S is more favorable than Eli Lilly and Company.

Institutional and Insider Ownership

82.5% of Eli Lilly and Company shares are held by institutional investors. Comparatively, 11.5% of Novo Nordisk A/S shares are held by institutional investors. 0.1% of Eli Lilly and Company shares are held by company insiders. Comparatively, 0.1% of Novo Nordisk A/S shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Eli Lilly and Company has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, Novo Nordisk A/S has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500.

Earnings & Valuation

This table compares Eli Lilly and Company and Novo Nordisk A/S”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eli Lilly and Company	$45.04 billion	15.26	$10.59 billion	$15.30	47.47
Novo Nordisk A/S	$42.12 billion	5.85	$14.64 billion	$3.64	15.15

Novo Nordisk A/S has lower revenue, but higher earnings than Eli Lilly and Company. Novo Nordisk A/S is trading at a lower price-to-earnings ratio than Eli Lilly and Company, indicating that it is currently the more affordable of the two stocks.

Summary

Eli Lilly and Company beats Novo Nordisk A/S on 11 of the 18 factors compared between the two stocks.

About Eli Lilly and Company

Eli Lilly and Company discovers, develops, and markets human pharmaceuticals worldwide. The company offers Basaglar, Humalog, Humalog Mix 75/25, Humalog U-100, Humalog U-200, Humalog Mix 50/50, insulin lispro, insulin lispro protamine, insulin lispro mix 75/25, Humulin, Humulin 70/30, Humulin N, Humulin R, and Humulin U-500 for diabetes; Jardiance, Mounjaro, and Trulicity for type 2 diabetes; and Zepbound for obesity. It also provides oncology products, including Alimta, Cyramza, Erbitux, Jaypirca, Retevmo, Tyvyt, and Verzenio. In addition, the company offers Olumiant for rheumatoid arthritis, atopic dermatitis, severe alopecia areata, and COVID-19; Taltz for plaque psoriasis, psoriatic arthritis, ankylosing spondylitis, and non-radiographic axial spondylarthritis; Omvoh for ulcerative colitis; Cymbalta for depressive disorder, diabetic peripheral neuropathic pain, generalized anxiety disorder, fibromyalgia, and chronic musculoskeletal pain; Ebglyss for severe atopic dermatitis; and Emgality for migraine prevention and episodic cluster headache. Further, it provides Cialis for erectile dysfunction and benign prostatic hyperplasia; and Forteo for osteoporosis. It has collaborations with Incyte Corporation; Boehringer Ingelheim Pharmaceuticals, Inc.; F. Hoffmann-La Roche Ltd and Genentech, Inc.; Biologics, Inc., AbCellera Biologics Inc.; and Chugai Pharmaceutical Co., Ltd. The company was founded in 1876 and is headquartered in Indianapolis, Indiana.

About Novo Nordisk A/S

Novo Nordisk A/S, together with its subsidiaries, engages in the research and development, manufacture, and distribution of pharmaceutical products in Europe, the Middle East, Africa, Mainland China, Hong Kong, Taiwan, North America, and internationally. It operates in two segments, Diabetes and Obesity Care, and Rare Disease. The Diabetes and Obesity care segment provides products for diabetes, obesity, cardiovascular, and other emerging therapy areas. The Rare Disease segment offers products in the areas of rare blood disorders, rare endocrine disorders, and hormone replacement therapy. The company also provides insulin pens, growth hormone pens, and injection needles. In addition, it offers smart solutions for diabetes treatment, such as smart insulin pens and Dose Check, an insulin dose guidance application. The company has a collaboration agreement with Aspen Pharmaceuticals to produce insulin products; and with Korro Bio, Inc. for the discovery and development of new genetic medicines to treat cardiometabolic diseases. Novo Nordisk A/S was founded in 1923 and is headquartered in Bagsvaerd, Denmark.