Reviewing Community Health Systems (CYH) and HMS (HMSY)

Community Health Systems (NYSE: CYH) and HMS (NASDAQ:HMSY) are both small-cap medical companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, profitability and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Community Health Systems and HMS, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Community Health Systems 4 10 0 0 1.71
HMS 0 3 4 1 2.75

Community Health Systems currently has a consensus price target of $5.79, suggesting a potential upside of 36.27%. HMS has a consensus price target of $20.19, suggesting a potential upside of 21.10%. Given Community Health Systems’ higher probable upside, analysts clearly believe Community Health Systems is more favorable than HMS.

Profitability

This table compares Community Health Systems and HMS’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Community Health Systems -3.97% -3.10% -0.22%
HMS 4.94% 7.93% 4.93%

Risk and Volatility

Community Health Systems has a beta of 1.42, suggesting that its share price is 42% more volatile than the S&P 500. Comparatively, HMS has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500.

Earnings and Valuation

This table compares Community Health Systems and HMS’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Community Health Systems $18.44 billion 0.03 -$1.72 billion ($5.98) -0.71
HMS $496.01 million 2.83 $37.63 million $0.29 57.48

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

Institutional & Insider Ownership

94.7% of Community Health Systems shares are held by institutional investors. Comparatively, 96.3% of HMS shares are held by institutional investors. 4.7% of Community Health Systems shares are held by company insiders. Comparatively, 3.2% of HMS shares are held by company 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 Community Health Systems on 10 of the 14 factors compared between the two stocks.

About Community Health Systems

Community Health Systems, Inc. is an operator of general acute care hospitals and outpatient facilities in communities across the country. The Company operates through hospital operations segment, which includes its general acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services. The Company provides healthcare services through the hospitals that it owns and operates and affiliated businesses in non-urban and selected urban markets throughout the United States. The services provided through its hospitals and affiliated businesses include general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric and rehabilitation services. The Company also provides additional outpatient services at urgent care centers, occupational medicine clinics, imaging centers, cancer centers, ambulatory surgery centers, and home health and hospice agencies.

About HMS

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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