Amgen vs Novo Nordisk Which Should You Buy?

Amgen and Novo Nordisk are two leading pharmaceutical companies in the biotechnology industry, known for their innovation and impactful contributions to healthcare. Both companies have a strong track record of developing cutting-edge treatments for a variety of diseases, making them attractive investment options for many investors. In recent years, Amgen and Novo Nordisk have been compared in terms of their stock performance, financial stability, and growth potential. This analysis aims to provide insights into the differences and similarities between these two companies to help investors make informed decisions.

Amgen or Novo Nordisk?

When comparing Amgen and Novo Nordisk, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Amgen and Novo Nordisk.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Amgen has a dividend yield of 3.3%, while Novo Nordisk has a dividend yield of 1.3%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Amgen reports a 5-year dividend growth of 10.04% year and a payout ratio of 112.70%. On the other hand, Novo Nordisk reports a 5-year dividend growth of 10.33% year and a payout ratio of 46.60%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Amgen P/E ratio at 34.60 and Novo Nordisk's P/E ratio at 36.75. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Amgen P/B ratio is 19.45 while Novo Nordisk's P/B ratio is 28.88.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Amgen has seen a 5-year revenue growth of 0.47%, while Novo Nordisk's is 1.24%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Amgen's ROE at 68.49% and Novo Nordisk's ROE at 86.40%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $271.48 for Amgen and $109.75 for Novo Nordisk. Over the past year, Amgen's prices ranged from $257.80 to $346.85, with a yearly change of 34.54%. Novo Nordisk's prices fluctuated between $94.73 and $148.15, with a yearly change of 56.39%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.