Humana (NYSE: HUM) and WellCare Health Plans (NYSE:WCG) are both mid-cap medical companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitabiliy, dividends, analyst recommendations, earnings, institutional ownership and risk.

Dividends

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

Analyst Recommendations

This is a summary of current ratings and price targets for Humana and WellCare Health Plans, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Humana 0 7 13 0 2.65
WellCare Health Plans 0 11 3 0 2.21

Humana presently has a consensus target price of $229.50, indicating a potential downside of 2.68%. WellCare Health Plans has a consensus target price of $165.18, indicating a potential downside of 10.11%. Given Humana’s stronger consensus rating and higher probable upside, analysts plainly believe Humana is more favorable than WellCare Health Plans.

Institutional and Insider Ownership

99.0% of Humana shares are held by institutional investors. Comparatively, 98.7% of WellCare Health Plans shares are held by institutional investors. 0.8% of Humana shares are held by insiders. Comparatively, 0.5% of WellCare Health Plans shares are held 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 and Volatility

Humana has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500. Comparatively, WellCare Health Plans has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.

Valuation & Earnings

This table compares Humana and WellCare Health Plans’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Humana $54.34 billion 0.63 $2.27 billion $9.85 23.94
WellCare Health Plans $14.65 billion 0.56 $656.20 million $6.08 30.23

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

Profitability

This table compares Humana and WellCare Health Plans’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Humana 2.71% 14.38% 5.44%
WellCare Health Plans 1.85% 14.75% 4.37%

Summary

Humana beats WellCare Health Plans on 13 of the 17 factors compared between the two stocks.

Humana Company Profile

Humana Inc. is a health and well-being company. The Company’s segments include Retail, Group and Specialty, Healthcare Services and Individual Commercial. 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 and Specialty segment consists of employer group commercial fully insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health. 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 Individual Commercial segment includes Individual Commercial products marketed under the HumanaOne brand.

WellCare Health Plans Company Profile

WellCare Health Plans, Inc. is a managed care company. The Company focuses on government-sponsored managed care services, primarily through Medicaid, Medicare Advantage (MA) and Medicare Prescription Drug Plans (PDPs), to families, children, seniors and individuals with medical needs. The Company operates through three segments: Medicaid Health Plans, Medicare Health Plans and Medicare PDPs. As of December 31, 2016, it served approximately 3.9 million members in 50 states and the District of Columbia. As of December 31, 2016, it operated Medicaid health plans in Arizona, Florida, Georgia, Hawaii, Illinois, Kentucky, Missouri, New Jersey, New York and South Carolina. As of December 31, 2016, it offered MA coordinated care plans (CCPs) in certain counties in Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Mississippi, New Jersey, New York, South Carolina, Tennessee and Texas.

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