Quest Diagnostics (NYSE: DGX) and LifePoint Health (NASDAQ:LPNT) are both medical companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.

Insider & Institutional Ownership

89.2% of Quest Diagnostics shares are owned by institutional investors. Comparatively, 99.2% of LifePoint Health shares are owned by institutional investors. 1.8% of Quest Diagnostics shares are owned by company insiders. Comparatively, 8.8% of LifePoint Health shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

Quest Diagnostics has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, LifePoint Health has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Quest Diagnostics and LifePoint Health, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quest Diagnostics 1 12 6 0 2.26
LifePoint Health 0 11 5 0 2.31

Quest Diagnostics currently has a consensus price target of $104.53, suggesting a potential upside of 7.75%. LifePoint Health has a consensus price target of $59.17, suggesting a potential upside of 24.77%. Given LifePoint Health’s stronger consensus rating and higher probable upside, analysts plainly believe LifePoint Health is more favorable than Quest Diagnostics.

Valuation and Earnings

This table compares Quest Diagnostics and LifePoint Health’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Quest Diagnostics $7.52 billion 1.76 $645.00 million $4.77 20.34
LifePoint Health $7.27 billion 0.26 $121.90 million $4.23 11.21

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

Profitability

This table compares Quest Diagnostics and LifePoint Health’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Quest Diagnostics 8.82% 15.53% 7.18%
LifePoint Health 2.45% 7.01% 2.53%

Dividends

Quest Diagnostics pays an annual dividend of $1.80 per share and has a dividend yield of 1.9%. LifePoint Health does not pay a dividend. Quest Diagnostics pays out 37.7% of its earnings in the form of a dividend. Quest Diagnostics has raised its dividend for 5 consecutive years.

Summary

Quest Diagnostics beats LifePoint Health on 11 of the 17 factors compared between the two stocks.

Quest Diagnostics Company Profile

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.

LifePoint Health Company Profile

LifePoint Health, Inc., through its subsidiaries, owns and operates community hospitals, regional health systems, physician practices, outpatient centers and post-acute facilities. As of December 31, 2016, the Company operated 72 hospital campuses in 22 states, having a total of 9,424 licensed beds. It offers a range of general and specialized healthcare services to patients through a network of hospitals and outpatient facilities. Its services include general surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, rehabilitation services and pediatric services, and in some of its hospitals, the Company offers specialized services, such as open-heart surgery, skilled nursing, psychiatric care and neuro-surgery. It provides outpatient services, such as same-day surgery, laboratory, x-ray, respiratory therapy, imaging, sports medicine and lithotripsy.

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