Universal American (NYSE: UAM) and Anthem (NYSE:ANTM) are both healthcare companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, institutional ownership, earnings, profitability, risk and analyst recommendations.

Insider & Institutional Ownership

85.7% of Universal American shares are held by institutional investors. Comparatively, 87.7% of Anthem shares are held by institutional investors. 7.7% of Universal American shares are held by insiders. Comparatively, 0.4% of Anthem 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 & Volatility

Universal American has a beta of 1.74, indicating that its stock price is 74% more volatile than the S&P 500. Comparatively, Anthem has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500.

Valuation & Earnings

This table compares Universal American and Anthem’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Universal American N/A N/A N/A ($0.86) -11.59
Anthem $88.03 billion 0.56 $5.75 billion $10.56 17.67

Anthem has higher revenue and earnings than Universal American. Universal American is trading at a lower price-to-earnings ratio than Anthem, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings for Universal American and Anthem, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal American 0 3 0 0 2.00
Anthem 0 9 8 0 2.47

Universal American presently has a consensus price target of $10.00, suggesting a potential upside of 0.30%. Anthem has a consensus price target of $181.31, suggesting a potential downside of 2.83%. Given Universal American’s higher possible upside, equities research analysts clearly believe Universal American is more favorable than Anthem.

Dividends

Anthem pays an annual dividend of $2.80 per share and has a dividend yield of 1.5%. Universal American does not pay a dividend. Anthem pays out 26.5% of its earnings in the form of a dividend. Universal American has increased its dividend for 2 consecutive years.

Profitability

This table compares Universal American and Anthem’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Universal American -5.12% -24.95% -8.23%
Anthem 3.24% 12.93% 4.96%

Summary

Anthem beats Universal American on 9 of the 14 factors compared between the two stocks.

Universal American Company Profile

Universal American Corp. provides an array of health insurance and managed care products and services to people covered by Medicare. The Company’s segments include Medicare Advantage, Management Services Organization (MSO), and Corporate & Other. The Medicare Advantage segment contains the operations of its initiatives in managed care for seniors. It operated 16 Medicare Shared Saving Program Accountable Care Organizations (ACOs) and two Next Generation ACOs, which included approximately 5,200 participating providers with approximately 221,800 assigned Medicare fee-for-service beneficiaries, as of December 31, 2016. The MSO segment supports its physician partnerships in the development of healthcare models, such as ACOs, with a range of capabilities and resources, including technology, analytics, clinical care coordination, regulatory compliance and program administration. It has developed a primary care physician alignment strategy, which is branded as The Healthy Collaboration.

Anthem Company Profile

Anthem, Inc. is a health benefits company. The Company operates through three segments: Commercial and Specialty Business, Government Business and Other. It offers a spectrum of network-based managed care plans to large and small employer, individual, Medicaid and Medicare markets. Its managed care plans include preferred provider organizations; health maintenance organizations; point-of-service plans; indemnity plans and other hybrid plans, including consumer-driven health plans; and hospital only and limited benefit products. It also provides an array of managed care services to self-funded customers, including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services. It provides an array of specialty and other insurance products and services, such as dental, vision, life and disability insurance benefits and radiology benefit management.

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