The Advisory Board (NASDAQ: ABCO) and Unifirst Corporation (NYSE:UNF) are both mid-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, dividends, institutional ownership, risk, earnings, profitability and analyst recommendations.

Profitability

This table compares The Advisory Board and Unifirst Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Advisory Board 13.65% 12.69% 3.30%
Unifirst Corporation 7.12% 7.41% 5.96%

Valuation & Earnings

This table compares The Advisory Board and Unifirst Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Advisory Board $799.15 million 2.70 $120.83 million $2.69 19.72
Unifirst Corporation $1.55 billion 1.81 $249.49 million $5.41 25.56

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

Analyst Recommendations

This is a breakdown of current recommendations for The Advisory Board and Unifirst Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Advisory Board 1 9 3 0 2.15
Unifirst Corporation 0 1 1 0 2.50

The Advisory Board currently has a consensus price target of $49.66, suggesting a potential downside of 6.39%. Unifirst Corporation has a consensus price target of $163.00, suggesting a potential upside of 17.86%. Given Unifirst Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Unifirst Corporation is more favorable than The Advisory Board.

Institutional and Insider Ownership

73.5% of Unifirst Corporation shares are held by institutional investors. 4.7% of The Advisory Board shares are held by insiders. Comparatively, 6.7% of Unifirst Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

The Advisory Board has a beta of 1.33, indicating that its share price is 33% more volatile than the S&P 500. Comparatively, Unifirst Corporation has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500.

Dividends

Unifirst Corporation pays an annual dividend of $0.15 per share and has a dividend yield of 0.1%. The Advisory Board does not pay a dividend. Unifirst Corporation pays out 2.8% of its earnings in the form of a dividend.

Summary

Unifirst Corporation beats The Advisory Board on 10 of the 16 factors compared between the two stocks.

The Advisory Board Company Profile

The Advisory Board Company is a provider of software and solutions to the healthcare and higher education industries. The Company offers subscription-based membership programs, software and data-enabled services. All of its programs are rooted in best practices and extends across four areas, including Best practices research, Technology, Data-enabled services and Consulting services. The best practices research and insight programs provide the foundation for all of its other programs. The Company offers technology analytics programs anchored by cloud-based software applications that surface performance improvement opportunities to accelerate progress. Through its consulting services, the Company provides on-the-ground support for performance improvement initiatives, as well as best practice professional management of areas of the hospital or medical group. The Company’s data-enabled services are primarily focused in the area of enrollment management.

Unifirst Corporation Company Profile

UniFirst Corporation is a provider of workplace uniforms and protective work wear clothing in the United States. The Company designs, manufactures, personalizes, rents, cleans, delivers, and sells a range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats, smocks, aprons and specialized protective wear, such as flame resistant and high visibility garments. It operates in six segments: the US Rental and Cleaning, Canadian Rental and Cleaning, Manufacturing (MFG), Specialty Garments Rental and Cleaning (Specialty Garments), First Aid and Corporate. The Company also rents and sells industrial wiping products, floor mats, facility service products and other non-garment items, and provides restroom and cleaning supplies and first aid cabinet services, and other safety supplies. It also decontaminates and cleans work clothes, which has been exposed to radioactive materials and service special cleanroom protective wear and facilities.

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