West Pharmaceutical Services (NYSE:WST) versus Becton, Dickinson and Company (NYSE:BDX) Critical Contrast

Becton, Dickinson and Company (NYSE:BDX) and West Pharmaceutical Services (NYSE:WST) are both large-cap medical companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, earnings, risk and institutional ownership.

Profitability

This table compares Becton, Dickinson and Company and West Pharmaceutical Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Becton, Dickinson and Company	7.51%	16.23%	7.46%
West Pharmaceutical Services	16.48%	18.43%	13.67%

Analyst Ratings

This is a summary of recent ratings for Becton, Dickinson and Company and West Pharmaceutical Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Becton, Dickinson and Company	0	9	3	0	2.25
West Pharmaceutical Services	0	4	7	2	2.85

Becton, Dickinson and Company presently has a consensus price target of $205.40, suggesting a potential upside of 8.56%. West Pharmaceutical Services has a consensus price target of $321.89, suggesting a potential upside of 19.11%. Given West Pharmaceutical Services’ stronger consensus rating and higher probable upside, analysts clearly believe West Pharmaceutical Services is more favorable than Becton, Dickinson and Company.

Risk and Volatility

Becton, Dickinson and Company has a beta of 0.25, indicating that its share price is 75% less volatile than the S&P 500. Comparatively, West Pharmaceutical Services has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500.

Earnings & Valuation

This table compares Becton, Dickinson and Company and West Pharmaceutical Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Becton, Dickinson and Company	$20.18 billion	2.69	$1.71 billion	$5.56	34.03
West Pharmaceutical Services	$2.89 billion	6.72	$492.70 million	$6.68	40.46

Becton, Dickinson and Company has higher revenue and earnings than West Pharmaceutical Services. Becton, Dickinson and Company is trading at a lower price-to-earnings ratio than West Pharmaceutical Services, indicating that it is currently the more affordable of the two stocks.

Dividends

Becton, Dickinson and Company pays an annual dividend of $4.16 per share and has a dividend yield of 2.2%. West Pharmaceutical Services pays an annual dividend of $0.84 per share and has a dividend yield of 0.3%. Becton, Dickinson and Company pays out 74.8% of its earnings in the form of a dividend. West Pharmaceutical Services pays out 12.6% 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. Becton, Dickinson and Company has increased its dividend for 53 consecutive years. Becton, Dickinson and Company is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

87.0% of Becton, Dickinson and Company shares are held by institutional investors. Comparatively, 93.9% of West Pharmaceutical Services shares are held by institutional investors. 0.4% of Becton, Dickinson and Company shares are held by insiders. Comparatively, 0.5% of West Pharmaceutical Services 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.

Summary

West Pharmaceutical Services beats Becton, Dickinson and Company on 14 of the 18 factors compared between the two stocks.

About Becton, Dickinson and Company

Becton, Dickinson and Company develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products for healthcare institutions, physicians, life science researchers, clinical laboratories, pharmaceutical industry, and the general public worldwide. The company operates in three segments: BD Medical, BD Life Sciences, and BD Interventional. The BD Medical segment provides peripheral intravenous (IV) and advanced peripheral catheters, central lines, acute dialysis catheters, vascular access technology, vascular care and preparation products, needle-free IV connectors and extensions sets, closed-system drug transfer devices, hazardous drug detections, hypodermic syringes and needles, anesthesia needles and trays, enteral syringes, and sharps disposal systems; IV medication safety and infusion therapy delivery systems, medication compounding workflow systems, automated medication dispensing and supply management systems, and medication inventory optimization and tracking systems; and prefillable drug delivery systems. The BD Life Sciences segment offers specimen and blood collection products; automated blood and tuberculosis culturing, molecular testing, microorganism identification and drug susceptibility, and liquid-based cytology systems, as well as rapid diagnostic assays, microbiology laboratory automation products, and plated media products; and fluorescence-activated cell sorters and analyzers, antibodies and kits, reagent systems, and solutions for single-cell gene expression analysis, as well as clinical oncology, immunological, and transplantation diagnostic/monitoring reagents and analyzers. The BD Interventional segment provides hernia and soft tissue repair, biological and bioresorbable grafts, biosurgery, and other surgical products; surgical infection prevention; peripheral intervention products; and urology and critical care products. The company was founded in 1897 and is headquartered in Franklin Lakes, New Jersey.

About West Pharmaceutical Services

West Pharmaceutical Services, Inc. designs, manufactures, and sells containment and delivery systems for injectable drugs and healthcare products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates in two segments, Proprietary Products and Contract-Manufactured Products. The Proprietary Products segment offers stoppers and seals for injectable packaging systems; syringe and cartridge components, including custom solutions for the needs of injectable drug applications, as well as administration systems that enhance the safe delivery of drugs through advanced reconstitution, mixing, and transfer technologies; and films, coatings, washing, and vision inspection and sterilization processes and services to enhance the quality of packaging components. This segment also provides drug containment solutions, including Crystal Zenith, a cyclic olefin polymer in the form of vials, syringes, and cartridges; and self-injection devices; and a range of integrated solutions, including analytical lab services, pre-approval primary packaging support and engineering development, regulatory expertise, and after-sales technical support. This segment serves biologic, generic, and pharmaceutical drug companies. The Contract-Manufactured Products segment is involved in the design, manufacture, and automated assembly of devices used in surgical, diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products. The company serves pharmaceutical, diagnostic, and medical device companies. It sells and distributes its products through its sales force and distribution network, contract sales agents, and regional distributors. West Pharmaceutical Services, Inc. was founded in 1923 and is headquartered in Exton, Pennsylvania.