CVS Health Corporation (NYSE: CVS) and Cardinal Health (NYSE:CAH) are both large-cap retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, earnings, institutional ownership, profitabiliy, risk, dividends and analyst recommendations.

Profitability

This table compares CVS Health Corporation and Cardinal Health’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CVS Health Corporation 2.86% 17.56% 6.64%
Cardinal Health 1.05% 25.78% 4.89%

Volatility & Risk

CVS Health Corporation has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500. Comparatively, Cardinal Health has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for CVS Health Corporation and Cardinal Health, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CVS Health Corporation 0 7 12 0 2.63
Cardinal Health 0 14 3 0 2.18

CVS Health Corporation currently has a consensus target price of $94.27, suggesting a potential upside of 22.39%. Cardinal Health has a consensus target price of $83.46, suggesting a potential upside of 9.40%. Given CVS Health Corporation’s stronger consensus rating and higher possible upside, equities analysts clearly believe CVS Health Corporation is more favorable than Cardinal Health.

Dividends

CVS Health Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.6%. Cardinal Health pays an annual dividend of $1.85 per share and has a dividend yield of 2.4%. CVS Health Corporation pays out 41.7% of its earnings in the form of a dividend. Cardinal Health pays out 44.0% 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. CVS Health Corporation has raised its dividend for 12 consecutive years and Cardinal Health has raised its dividend for 9 consecutive years. CVS Health Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

82.1% of CVS Health Corporation shares are owned by institutional investors. Comparatively, 87.6% of Cardinal Health shares are owned by institutional investors. 0.6% of CVS Health Corporation shares are owned by company insiders. Comparatively, 0.9% of Cardinal Health shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares CVS Health Corporation and Cardinal Health’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CVS Health Corporation $178.83 billion 0.44 $12.81 billion $4.80 16.05
Cardinal Health $128.39 billion 0.19 $3.10 billion $4.20 18.16

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

Summary

CVS Health Corporation beats Cardinal Health on 13 of the 17 factors compared between the two stocks.

About CVS Health Corporation

CVS Health Corporation, together with its subsidiaries, is an integrated pharmacy healthcare company. The Company provides pharmacy care for the senior community through Omnicare, Inc. (Omnicare) and Omnicare’s long-term care (LTC) operations, which include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. It operates through three segments: Pharmacy Services, Retail/LTC and Corporate. The Pharmacy Services Segment provides a range of pharmacy benefit management (PBM) solutions to its clients. As of December 31, 2016, the Retail/LTC Segment included 9,709 retail locations (of which 7,980 were its stores that operated a pharmacy and 1,674 were its pharmacies located within Target Corporation (Target) stores), its online retail pharmacy Websites, CVS.com, Navarro.com and Onofre.com.br, 38 onsite pharmacy stores, its long-term care pharmacy operations and its retail healthcare clinics.

About Cardinal Health

Cardinal Health, Inc. is a healthcare services and products company. The Company operates through two segments: Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare and consumer products. This segment also operates nuclear pharmacies and cyclotron facilities; provides pharmacy management services to hospitals, as well as medication therapy management and patient outcomes services to hospitals, other healthcare providers and payers, and provides services to healthcare companies. The Medical segment distributes a range of medical, surgical and laboratory products, and provides services to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers. This segment also manufactures, sources and develops its own Cardinal Health brand medical and surgical products. It provides post-acute care management and transition services, and software to hospitals.

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