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

Earnings & Valuation

This table compares WellCare Health Plans and Aetna’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
WellCare Health Plans $14.65 billion 0.53 $656.20 million $5.69 30.44
Aetna $62.63 billion 0.83 $5.73 billion $4.58 34.23

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

Profitability

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

Net Margins Return on Equity Return on Assets
WellCare Health Plans 1.66% 14.91% 4.12%
Aetna 2.52% 20.52% 5.35%

Institutional & Insider Ownership

98.7% of WellCare Health Plans shares are held by institutional investors. Comparatively, 91.7% of Aetna shares are held by institutional investors. 0.5% of WellCare Health Plans shares are held by company insiders. Comparatively, 1.1% of Aetna shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Aetna pays an annual dividend of $2.00 per share and has a dividend yield of 1.3%. WellCare Health Plans does not pay a dividend. Aetna pays out 43.7% of its earnings in the form of a dividend.

Volatility & Risk

WellCare Health Plans has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Aetna has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for WellCare Health Plans and Aetna, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WellCare Health Plans 0 10 3 0 2.23
Aetna 0 6 14 0 2.70

WellCare Health Plans presently has a consensus price target of $169.80, suggesting a potential downside of 1.97%. Aetna has a consensus price target of $156.38, suggesting a potential downside of 0.26%. Given Aetna’s stronger consensus rating and higher probable upside, analysts clearly believe Aetna is more favorable than WellCare Health Plans.

Summary

Aetna beats WellCare Health Plans on 11 of the 16 factors compared between the two stocks.

About WellCare Health Plans

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.

About Aetna

Aetna Inc. is a diversified healthcare benefits company. The Company operates through three segments: Health Care, Group Insurance and Large Case Pensions. It offers a range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, medical management capabilities, Medicaid healthcare management services, Medicare Advantage and Medicare Supplement plans, workers’ compensation administrative services and health information technology (HIT) products and services. The Health Care segment consists of medical, pharmacy benefit management services, dental, behavioral health and vision plans offered on both an Insured basis and an employer-funded basis, and emerging businesses products and services. The Group Insurance segment includes group life insurance and group disability products. Its products are offered on an Insured basis.

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