Universal American (NYSE: UAM) and Humana (NYSE:HUM) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, profitabiliy, analyst recommendations and valuation.

Analyst Ratings

This is a breakdown of current recommendations for Universal American and Humana, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal American 0 4 0 0 2.00
Humana 0 7 12 0 2.63

Universal American currently has a consensus target price of $9.67, indicating a potential downside of 3.04%. Humana has a consensus target price of $221.39, indicating a potential downside of 4.97%. Given Universal American’s higher probable upside, research analysts plainly believe Universal American is more favorable than Humana.

Dividends

Humana pays an annual dividend of $1.60 per share and has a dividend yield of 0.7%. Universal American does not pay a dividend. Humana pays out 16.2% of its earnings in the form of a dividend. Humana has raised its dividend for 6 consecutive years.

Valuation and Earnings

This table compares Universal American and Humana’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Universal American N/A N/A N/A ($0.86) -11.59
Humana $54.34 billion 0.62 $2.27 billion $9.85 23.65

Humana has higher revenue and earnings than Universal American. Universal American is trading at a lower price-to-earnings ratio than Humana, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Universal American has a beta of 1.74, meaning that its share price is 74% more volatile than the S&P 500. Comparatively, Humana has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Profitability

This table compares Universal American and Humana’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Universal American -5.99% 0.68% 0.15%
Humana 2.71% 14.38% 5.44%

Insider & Institutional Ownership

85.7% of Universal American shares are held by institutional investors. Comparatively, 98.9% of Humana shares are held by institutional investors. 7.7% of Universal American shares are held by company insiders. Comparatively, 0.8% of Humana shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Humana beats Universal American on 10 of the 14 factors compared between the two stocks.

Universal American Company Profile

Universal American Corp. provides an array of health insurance and managed care products and services to people covered by Medicare. The Company’s segments include Medicare Advantage, Management Services Organization (MSO), and Corporate & Other. The Medicare Advantage segment contains the operations of its initiatives in managed care for seniors. It operated 16 Medicare Shared Saving Program Accountable Care Organizations (ACOs) and two Next Generation ACOs, which included approximately 5,200 participating providers with approximately 221,800 assigned Medicare fee-for-service beneficiaries, as of December 31, 2016. The MSO segment supports its physician partnerships in the development of healthcare models, such as ACOs, with a range of capabilities and resources, including technology, analytics, clinical care coordination, regulatory compliance and program administration. It has developed a primary care physician alignment strategy, which is branded as The Healthy Collaboration.

Humana Company Profile

Humana Inc. is a health and well-being company. The Company’s segments include Retail, Group, Healthcare Services and Other Businesses. The Retail segment consists of Medicare benefits, as well as individual commercial fully insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health and financial protection products. The Group segment consists of employer group commercial fully insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health and voluntary insurance benefits, as well as administrative services only (ASO) products. The Healthcare Services segment includes services offered to its health plan members, as well as to third parties, including pharmacy solutions, provider services, home-based services and clinical programs, as well as services and capabilities to manage population health. The Other Businesses segment includes its closed-block long-term care insurance policies.

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