Magellan Health (NASDAQ: MGLN) and Molina Healthcare (NYSE:MOH) are both mid-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, risk and institutional ownership.

Institutional & Insider Ownership

93.3% of Magellan Health shares are owned by institutional investors. Comparatively, 95.3% of Molina Healthcare shares are owned by institutional investors. 3.6% of Magellan Health shares are owned by company insiders. Comparatively, 6.2% of Molina Healthcare shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Magellan Health has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, Molina Healthcare has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500.

Profitability

This table compares Magellan Health and Molina Healthcare’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Magellan Health 1.59% 8.88% 4.08%
Molina Healthcare -1.07% 16.10% 3.35%

Valuation and Earnings

This table compares Magellan Health and Molina Healthcare’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Magellan Health $5.28 billion 0.38 $242.58 million $3.53 23.99
Molina Healthcare $18.51 billion 0.20 $106.00 million ($3.61) -18.15

Magellan Health has higher revenue, but lower earnings than Molina Healthcare. Molina Healthcare is trading at a lower price-to-earnings ratio than Magellan Health, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Magellan Health and Molina Healthcare, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Magellan Health 1 0 3 0 2.50
Molina Healthcare 3 6 5 0 2.14

Magellan Health currently has a consensus target price of $81.25, indicating a potential downside of 4.07%. Molina Healthcare has a consensus target price of $62.50, indicating a potential downside of 4.62%. Given Magellan Health’s stronger consensus rating and higher possible upside, analysts plainly believe Magellan Health is more favorable than Molina Healthcare.

Magellan Health Company Profile

Magellan Health, Inc. is engaged in the healthcare management business. The Company’s segments include Healthcare, Pharmacy Management and Corporate. It is focused on managing special populations, complete pharmacy benefits and other specialty areas of healthcare. Its Healthcare includes its management of behavioral healthcare services and employee assistance program (EAP) services, management of other specialty areas, including diagnostic imaging and musculoskeletal management, and the integrated management of physical, behavioral and pharmaceutical healthcare for special populations, delivered through Magellan Complete Care (MCC). Its Pharmacy Management segment consists of products and solutions that provide clinical and financial management of pharmaceuticals paid under medical and pharmacy benefit programs. Its Corporate segment consists primarily of operational support functions. It provides services to health plans and other managed care organizations (MCOs).

Molina Healthcare Company Profile

Molina Healthcare, Inc. offers Medicaid-related solutions for low-income families and individuals, and assists government agencies in their administration of the Medicaid program. The Company operates through three segments: Health Plans, Molina Medicaid Solutions and Other, which includes its Pathways Health and Community Support LLC (Pathways) business. It arranges healthcare services for persons served by Medicaid, Medicare, the Children’s Health Insurance Program (CHIP) and the Marketplace, and products to assist government agencies in their administration of the Medicaid program. As of December 31, 2016, the Company’s Health Plans segment consisted of health plans in 12 states and the Commonwealth of Puerto Rico, and its direct delivery business. The Molina Medicaid Solutions segment provides support to state government agencies in the administration of their Medicaid programs, including business processing, information technology development, and administrative services.

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