Chemed (NYSE: CHE) and Laboratory Corporation of America (NYSE:LH) are both mid-cap medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Dividends

Chemed pays an annual dividend of $1.12 per share and has a dividend yield of 0.5%. Laboratory Corporation of America does not pay a dividend. Chemed pays out 24.9% of its earnings in the form of a dividend. Chemed has raised its dividend for 8 consecutive years.

Institutional & Insider Ownership

97.7% of Chemed shares are owned by institutional investors. Comparatively, 91.5% of Laboratory Corporation of America shares are owned by institutional investors. 4.9% of Chemed shares are owned by insiders. Comparatively, 0.9% of Laboratory Corporation of America shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Chemed and Laboratory Corporation of America, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chemed 0 2 1 0 2.33
Laboratory Corporation of America 0 5 7 0 2.58

Chemed currently has a consensus target price of $228.50, suggesting a potential downside of 7.69%. Laboratory Corporation of America has a consensus target price of $171.00, suggesting a potential upside of 9.27%. Given Laboratory Corporation of America’s stronger consensus rating and higher possible upside, analysts plainly believe Laboratory Corporation of America is more favorable than Chemed.

Profitability

This table compares Chemed and Laboratory Corporation of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chemed 4.62% 27.69% 15.16%
Laboratory Corporation of America 7.40% 16.75% 6.43%

Volatility & Risk

Chemed has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500. Comparatively, Laboratory Corporation of America has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500.

Valuation and Earnings

This table compares Chemed and Laboratory Corporation of America’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Chemed $1.58 billion 2.51 $108.74 million $4.50 55.01
Laboratory Corporation of America $9.64 billion 1.65 $732.10 million $7.17 21.83

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

Summary

Chemed beats Laboratory Corporation of America on 9 of the 17 factors compared between the two stocks.

Chemed 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.

Laboratory Corporation of America Company Profile

Laboratory Corporation of America Holdings is a life sciences company that is integrated in guiding patient care, providing clinical laboratory and end-to-end drug development services. The Company operates as a healthcare diagnostics company. The Company operates through two segments: LabCorp Diagnostics (LCD) and Covance Drug Development (CDD). The LCD segment is an independent clinical laboratory business, which offers menu of frequently requested and specialty testing through an integrated network of primary and specialty laboratories across the United States. The CDD segment offers drug development services, and provides a range of drug research and development (R&D) and market access services to biopharmaceutical companies and medical device companies across the world. It serves a range of customers, including managed care organizations (MCOs), biopharmaceutical companies, governmental agencies, physicians and other healthcare providers.

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