Select Medical Holdings Corporation (NYSE: SEM) and Chemed Corp. (NYSE:CHE) are both mid-cap medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Volatility & Risk

Select Medical Holdings Corporation has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500. Comparatively, Chemed Corp. has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Dividends

Chemed Corp. pays an annual dividend of $1.12 per share and has a dividend yield of 0.6%. Select Medical Holdings Corporation does not pay a dividend. Chemed Corp. pays out 28.1% of its earnings in the form of a dividend. Select Medical Holdings Corporation has raised its dividend for 8 consecutive years.

Profitability

This table compares Select Medical Holdings Corporation and Chemed Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Select Medical Holdings Corporation 1.95% 9.61% 1.84%
Chemed Corp. 4.16% 26.18% 14.62%

Insider and Institutional Ownership

79.0% of Select Medical Holdings Corporation shares are owned by institutional investors. Comparatively, 97.0% of Chemed Corp. shares are owned by institutional investors. 19.9% of Select Medical Holdings Corporation shares are owned by company insiders. Comparatively, 5.3% of Chemed Corp. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings for Select Medical Holdings Corporation and Chemed Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Select Medical Holdings Corporation 1 2 3 0 2.33
Chemed Corp. 0 2 1 0 2.33

Select Medical Holdings Corporation presently has a consensus target price of $18.40, indicating a potential downside of 1.08%. Chemed Corp. has a consensus target price of $214.50, indicating a potential upside of 8.72%. Given Chemed Corp.’s higher probable upside, analysts clearly believe Chemed Corp. is more favorable than Select Medical Holdings Corporation.

Valuation & Earnings

This table compares Select Medical Holdings Corporation and Chemed Corp.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Select Medical Holdings Corporation $4.26 billion 0.58 $474.80 million $0.64 29.06
Chemed Corp. $1.62 billion 1.95 $226.52 million $3.99 49.45

Select Medical Holdings Corporation has higher revenue and earnings than Chemed Corp.. Select Medical Holdings Corporation is trading at a lower price-to-earnings ratio than Chemed Corp., indicating that it is currently the more affordable of the two stocks.

Select Medical Holdings Corporation Company Profile

Select Medical Holdings Corporation is an operator of specialty hospitals, outpatient rehabilitation clinics and occupational medicine centers in the United States. The Company’s segments include specialty hospitals, outpatient rehabilitation, Concentra and Other. The specialty hospitals segment consists of hospitals designed to serve the needs of long term acute patients and hospitals designed to serve patients that require intensive medical rehabilitation care. The outpatient rehabilitation segment consists of clinics that provide physical, occupational, and speech rehabilitation services. The Concentra segment consists of medical centers and contract services provided at employer worksites and Department of Veterans Affairs community-based outpatient clinics (CBOCs) that deliver occupational medicine, physical therapy, veteran’s healthcare, and consumer health services. As of December 31, 2016, the Company had operations in 46 states and the District of Columbia.

Chemed Corp. Company Profile

Chemed Corporation purchases, operates and divests subsidiaries engaged in various business activities. The Company operates through two segments: the VITAS segment (VITAS) and the Roto-Rooter segment (Roto-Rooter). The Company’s VITAS provides hospice and palliative care services to its patients through a network of physicians, registered nurses, home health aides, social workers, clergy and volunteers. VITAS is the provider of hospice services in an industry dominated primarily by small, non-profit, community-based hospices. VITAS provides hospice care to Medicare beneficiaries participating in these managed care programs. A portion of its VITAS business is operated in the state of Florida. The Roto-Rooter segment provides plumbing, drain cleaning, water restoration and other related services to both residential and commercial customers.

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