China Cord Blood (NYSE: CO) and HMS (NASDAQ:HMSY) are both small-cap healthcare companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, risk, institutional ownership, earnings, dividends and analyst recommendations.

Valuation & Earnings

This table compares China Cord Blood and HMS’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
China Cord Blood $110.41 million 11.37 $18.33 million $0.36 28.92
HMS $496.01 million 2.79 $37.63 million $0.29 56.66

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

Profitability

This table compares China Cord Blood and HMS’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Cord Blood 26.79% 9.68% 4.36%
HMS 4.94% 7.93% 4.93%

Analyst Recommendations

This is a summary of current ratings and target prices for China Cord Blood and HMS, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Cord Blood 0 0 0 0 N/A
HMS 0 3 4 1 2.75

HMS has a consensus target price of $20.19, suggesting a potential upside of 22.87%. Given HMS’s higher probable upside, analysts clearly believe HMS is more favorable than China Cord Blood.

Volatility & Risk

China Cord Blood has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, HMS has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Insider and Institutional Ownership

9.1% of China Cord Blood shares are owned by institutional investors. Comparatively, 96.3% of HMS shares are owned by institutional investors. 3.2% of HMS shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

HMS beats China Cord Blood on 9 of the 14 factors compared between the two stocks.

China Cord Blood Company Profile

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.

HMS Company Profile

HMS Holdings Corp. is a holding company. The Company, through its subsidiaries, operates in the United States healthcare insurance benefit cost containment marketplace. It provides coordination of benefits services to government, and private healthcare payers and sponsors. Its payment integrity services ensure that healthcare claims billed are accurate and appropriate. It offers services to state Medicaid agencies, government health agencies and health plans, including Medicaid managed care, Medicare Advantage and group and individual health lines of business; government and private employers; and other healthcare payers and sponsors, including child support agencies. It serves approximately 45 state Medicaid programs and the District of Columbia, and government health agencies, including Centers for Medicare & Medicaid Services (CMS) and the Veterans Health Administration (VHA). It also provides services to approximately 250 health plans and supports their multiple lines of business.

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