China Cord Blood Corporation (NYSE: CO) and Quest Diagnostics (NYSE:DGX) are both medical companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, dividends, analyst recommendations, risk and valuation.

Dividends

Quest Diagnostics pays an annual dividend of $1.80 per share and has a dividend yield of 1.9%. China Cord Blood Corporation does not pay a dividend. Quest Diagnostics pays out 36.3% of its earnings in the form of a dividend. China Cord Blood Corporation has raised its dividend for 5 consecutive years.

Risk and Volatility

China Cord Blood Corporation has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, Quest Diagnostics has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Earnings and Valuation

This table compares China Cord Blood Corporation and Quest Diagnostics’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
China Cord Blood Corporation $124.21 million 9.98 $53.01 million $0.29 37.66
Quest Diagnostics $7.59 billion 1.71 $1.44 billion $4.96 19.17

Quest Diagnostics has higher revenue and earnings than China Cord Blood Corporation. Quest Diagnostics is trading at a lower price-to-earnings ratio than China Cord Blood Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares China Cord Blood Corporation and Quest Diagnostics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Cord Blood Corporation 22.07% 8.64% 3.50%
Quest Diagnostics 9.28% 15.66% 7.24%

Analyst Ratings

This is a summary of recent ratings and target prices for China Cord Blood Corporation and Quest Diagnostics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Cord Blood Corporation 0 0 0 0 N/A
Quest Diagnostics 1 11 6 0 2.28

Quest Diagnostics has a consensus price target of $105.14, indicating a potential upside of 10.58%. Given Quest Diagnostics’ higher possible upside, analysts clearly believe Quest Diagnostics is more favorable than China Cord Blood Corporation.

Institutional & Insider Ownership

13.3% of China Cord Blood Corporation shares are owned by institutional investors. Comparatively, 87.0% of Quest Diagnostics shares are owned by institutional investors. 1.8% of Quest Diagnostics shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Quest Diagnostics beats China Cord Blood Corporation on 10 of the 16 factors compared between the two stocks.

About China Cord Blood Corporation

China Cord Blood Corporation is a provider of cord blood banking services in China. The Company and its subsidiaries are principally engaged in the provision of umbilical cord blood storage and ancillary services in the People’s Republic of China. It provides cord blood testing, processing and storage services under the direction of subscribers for a cord blood processing fee and a storage fee. It also tests, processes and stores donated cord blood, and provides matching services to the public for a fee. The Company provides cord blood processing and storage services for expectant parents interested in capturing the opportunities made available by evolving medical treatments and technologies, such as cord blood transplants. It also preserves cord blood units donated by the public; provides matching services on such donated units, and delivers matching units to patients in need of transplants. As of March 31, 2016, the Company had three operating cord blood banks.

About Quest Diagnostics

Quest Diagnostics Incorporated is a provider of diagnostic information services. The Company operates through two businesses: Diagnostic Information Services and Diagnostic Solutions. The Diagnostic Information Services business develops and delivers diagnostic testing information and services, providing insights that empower and enable a range of customers, including patients, clinicians, hospitals, integrated delivery networks (IDNs), health plans, employers and accountable care organizations (ACOs). Its Diagnostic Solutions group includes its risk assessment services business, which offers solutions for insurers, and its healthcare information technology businesses, which offers solutions for healthcare providers. The Company’s services are provided under the Quest Diagnostics brand, but it also provides services under other brands, including AmeriPath, Dermpath Diagnostics, Focus Diagnostics, Athena Diagnostics, ExamOne, Quanum and Care360.

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