Critical Contrast: Acme United (NYSE:ACU) and West Pharmaceutical Services (NYSE:WST)

West Pharmaceutical Services (NYSE:WST) and Acme United (NYSE:ACU) are both healthcare companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, analyst recommendations, profitability, risk and earnings.

Analyst Ratings

This is a summary of recent ratings and target prices for West Pharmaceutical Services and Acme United, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
West Pharmaceutical Services	0	2	12	0	2.86
Acme United	0	0	0	1	4.00

West Pharmaceutical Services presently has a consensus target price of $382.00, suggesting a potential upside of 4.50%. Given West Pharmaceutical Services’ higher possible upside, research analysts clearly believe West Pharmaceutical Services is more favorable than Acme United.

Insider and Institutional Ownership

93.9% of West Pharmaceutical Services shares are owned by institutional investors. Comparatively, 62.1% of Acme United shares are owned by institutional investors. 0.6% of West Pharmaceutical Services shares are owned by insiders. Comparatively, 29.5% of Acme United shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk & Volatility

West Pharmaceutical Services has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500. Comparatively, Acme United has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500.

Dividends

West Pharmaceutical Services pays an annual dividend of $0.88 per share and has a dividend yield of 0.2%. Acme United pays an annual dividend of $0.64 per share and has a dividend yield of 1.0%. West Pharmaceutical Services pays out 11.3% of its earnings in the form of a dividend. Acme United pays out 26.9% 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. Acme United has raised its dividend for 20 consecutive years. Acme United is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares West Pharmaceutical Services and Acme United’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
West Pharmaceutical Services	16.98%	20.11%	14.83%
Acme United	10.25%	9.70%	6.10%

Valuation & Earnings

This table compares West Pharmaceutical Services and Acme United”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
West Pharmaceutical Services	$3.07 billion	8.37	$493.70 million	$7.81	46.81
Acme United	$211.60 million	1.14	$17.79 million	$2.38	26.68

West Pharmaceutical Services has higher revenue and earnings than Acme United. Acme United 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.

Summary

West Pharmaceutical Services beats Acme United on 13 of the 18 factors compared between the two stocks.

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.

About Acme United

Acme United Corporation supplies cutting, measuring, first aid, and sharpening products to the school, home, office, hardware, sporting goods, and industrial markets in the United States, Canada, Europe, and internationally. The company offers scissors, shears, knives, rulers, pencil sharpeners, paper trimmers, safety cutters, lettering products, glue guns, and other craft products under the Westcott brand name; and cutting tools under the Clauss brand. It also provides sharpening knives, scissors, chisels, skis, skates, and other edge under the DMT brand. In addition, the company offers first aid kit and safety solutions under the First Aid Only brand; portable eyewash solution and over-the-counter medication, including active ingredients aspirin, acetaminophen, and ibuprofen under the PhysiciansCare brand; bodily fluid and spill clean-up solution under the Spill Magic brand; various first aid kit, refill, and safety supplies, including CPR kits, burn kits, and automotive and emergency first aid kits under the First Aid Central; first aid kits for the promotional products industry under Safety Made brand; and alcohol prep pads, alcohol wipes, benzalkonium chloride wipes, various antiseptic wipes, castile soaps, and lens cleaning wipes under the Med-Nap brand. It sells its products directly and through its independent manufacturer representatives to wholesale, contract, and retail stationery distributors; office supply super stores, mass market retailers, industrial and medical distributors, school supply distributors, drug store retailers, sporting goods stores, hardware chains, and wholesale florists, as well as through its websites. The company was formerly known as Acme Shear Company and changed its name to Acme United Corporation in 1971. Acme United Corporation was founded in 1867 and is based in Shelton, Connecticut.