Danaher (NYSE: DHR) and EnteroMedics (NASDAQ:RSLS) are both multi-sector conglomerates companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, institutional ownership, valuation, dividends and profitability.
Volatility and Risk
Danaher has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500. Comparatively, EnteroMedics has a beta of 2.98, suggesting that its share price is 198% more volatile than the S&P 500.
Institutional & Insider Ownership
76.3% of Danaher shares are owned by institutional investors. Comparatively, 0.8% of EnteroMedics shares are owned by institutional investors. 12.2% of Danaher shares are owned by insiders. Comparatively, 26.4% of EnteroMedics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Danaher and EnteroMedics’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Danaher||$16.88 billion||3.87||$2.55 billion||$3.39||27.73|
Danaher has higher revenue and earnings than EnteroMedics. EnteroMedics is trading at a lower price-to-earnings ratio than Danaher, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and price targets for Danaher and EnteroMedics, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Danaher presently has a consensus price target of $93.81, suggesting a potential downside of 0.20%. EnteroMedics has a consensus price target of $11.03, suggesting a potential upside of 711.03%. Given EnteroMedics’ stronger consensus rating and higher probable upside, analysts plainly believe EnteroMedics is more favorable than Danaher.
This table compares Danaher and EnteroMedics’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Danaher pays an annual dividend of $0.56 per share and has a dividend yield of 0.6%. EnteroMedics does not pay a dividend. Danaher pays out 16.5% of its earnings in the form of a dividend. Danaher has raised its dividend for 3 consecutive years.
Danaher beats EnteroMedics on 10 of the 16 factors compared between the two stocks.
Danaher Company Profile
Danaher Corporation (Danaher) designs, manufactures and markets professional, medical, industrial and commercial products and services. The Company operates through four segments: Life Sciences, which offers a range of research tools that scientists use to study the basic building blocks of life, including genes, proteins, metabolites and cells, in order to understand the causes of disease, identify new therapies and test new drugs and vaccines; Diagnostics; which offers analytical instruments, reagents, consumables, software and services; Dental, which provides products that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone, and Environmental & Applied Solutions, which consists of various lines of business, including water quality and product identification. As of December 31, 2016, Danaher’s research and development, manufacturing, sales, distribution, service and administrative facilities were located in over 60 countries.
EnteroMedics Company Profile
ReShape Lifesciences Inc., formerly EnteroMedics Inc., is a medical device company. The Company is focused on the design and development of devices that use neuroblocking technology to treat obesity, metabolic diseases and other gastrointestinal disorders. The Company’s neuroblocking technology, which is referred to as VBLOC therapy, is designed to intermittently block the vagus nerve. The Company’s initial product is the Maestro Rechargeable System, which uses VBLOC therapy to limit the expansion of the stomach, help control hunger sensations between meals, reduce the frequency and intensity of stomach contractions and produce a feeling of early and prolonged fullness. The Company’s VBLOC therapy is designed to block the gastrointestinal effects of the vagus nerve by replicating a vagotomy using high-frequency, low-energy electrical impulses to intermittently interrupt naturally occurring neural impulses on the vagus nerve between the brain and the digestive system.
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