Catamaran Corp (USA) (NASDAQ: SXCI) and Aetna (NYSE:AET) are both large-cap managed health care – nec companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, analyst recommendations, dividends, earnings and institutional ownership.

Risk and Volatility

Catamaran Corp (USA) has a beta of -0.18, indicating that its share price is 118% less volatile than the S&P 500. Comparatively, Aetna has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500.

Earnings and Valuation

This table compares Catamaran Corp (USA) and Aetna’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Catamaran Corp (USA) N/A N/A N/A $1.64 37.48
Aetna $63.16 billion 0.91 $2.27 billion $5.40 32.78

Aetna has higher revenue and earnings than Catamaran Corp (USA). Aetna is trading at a lower price-to-earnings ratio than Catamaran Corp (USA), indicating that it is currently the more affordable of the two stocks.

Dividends

Aetna pays an annual dividend of $2.00 per share and has a dividend yield of 1.1%. Catamaran Corp (USA) does not pay a dividend. Aetna pays out 37.0% of its earnings in the form of a dividend.

Profitability

This table compares Catamaran Corp (USA) and Aetna’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Catamaran Corp (USA) 1.66% 6.54% 4.25%
Aetna 2.93% 21.84% 5.80%

Institutional and Insider Ownership

89.5% of Aetna shares are held by institutional investors. 0.9% of Aetna shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Catamaran Corp (USA) and Aetna, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Catamaran Corp (USA) 0 0 0 0 N/A
Aetna 0 8 12 0 2.60

Aetna has a consensus target price of $173.00, suggesting a potential downside of 2.25%. Given Aetna’s higher possible upside, analysts plainly believe Aetna is more favorable than Catamaran Corp (USA).

Summary

Aetna beats Catamaran Corp (USA) on 11 of the 12 factors compared between the two stocks.

About Catamaran Corp (USA)

Catamaran Corporation (Catamaran) is a provider of pharmacy benefit management (PBM) services and healthcare information technology (HCIT) solutions to the healthcare benefit management industry. The Company operates in two segments: PBM and HCIT. The Company offers PBM services, which are marketed under the Catamaran PBM brand, and is engaged in owning and operating a network of mail and specialty pharmacies. In addition, the Company is a national provider of drug benefits to its customers under the federal government’s Medicare Part D program. The Company’s HCIT product offerings include a range of software products for managing prescription drug programs and for drug prescribing and dispensing. The Company’s customers include organizations in the pharmaceutical supply chain, such as pharmacy benefit managers, managed care organizations, self-insured employer groups, unions, third-party healthcare plan administrators, and state and federal government entities.

About Aetna

Aetna Inc. is a diversified healthcare benefits company. The Company operates through three segments: Health Care, Group Insurance and Large Case Pensions. It offers a range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, medical management capabilities, Medicaid healthcare management services, Medicare Advantage and Medicare Supplement plans, workers’ compensation administrative services and health information technology (HIT) products and services. The Health Care segment consists of medical, pharmacy benefit management services, dental, behavioral health and vision plans offered on both an Insured basis and an employer-funded basis, and emerging businesses products and services. The Group Insurance segment includes group life insurance and group disability products. Its products are offered on an Insured basis.

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