The Providence Service (NASDAQ: PRSC) and MEDNAX (NYSE:MD) are both healthcare companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, risk and profitability.

Profitability

This table compares The Providence Service and MEDNAX’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Providence Service 4.91% 6.29% 2.63%
MEDNAX 7.76% 10.80% 5.57%

Risk & Volatility

The Providence Service has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500. Comparatively, MEDNAX has a beta of 0.39, meaning that its stock price is 61% less volatile than the S&P 500.

Valuation and Earnings

This table compares The Providence Service and MEDNAX’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Providence Service $1.58 billion 0.55 $91.92 million ($1.51) -43.30
MEDNAX $3.18 billion 1.55 $324.91 million $2.82 18.66

MEDNAX has higher revenue and earnings than The Providence Service. The Providence Service is trading at a lower price-to-earnings ratio than MEDNAX, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

95.3% of The Providence Service shares are owned by institutional investors. Comparatively, 98.4% of MEDNAX shares are owned by institutional investors. 18.9% of The Providence Service shares are owned by insiders. Comparatively, 2.4% of MEDNAX shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and price targets for The Providence Service and MEDNAX, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Providence Service 0 1 1 0 2.50
MEDNAX 1 8 3 0 2.17

The Providence Service currently has a consensus target price of $67.00, suggesting a potential upside of 2.48%. MEDNAX has a consensus target price of $53.82, suggesting a potential upside of 2.28%. Given The Providence Service’s stronger consensus rating and higher probable upside, analysts clearly believe The Providence Service is more favorable than MEDNAX.

Summary

MEDNAX beats The Providence Service on 10 of the 14 factors compared between the two stocks.

The Providence Service Company Profile

The Providence Service Corporation (Providence) is a holding company. The Company, through its subsidiaries, is engaged in the provision of healthcare and workforce development services for public and private sector entities. The Company’s segments include Non-Emergency Transportation Services (NET Services), Workforce Development Services (WD Services) and Matrix Investment. NET Services segment includes nationwide provider of non-emergency medical transportation programs for state governments and managed care organizations. WD Services segment is a global provider of employment preparation and placement and legal offender rehabilitation services to eligible participants of government sponsored programs. Matrix Investment segment includes minority interest in nationwide provider of in-home care optimization and management solutions, including comprehensive health assessments (CHAs), to members of managed care organizations, accounted for as an equity method investment.

MEDNAX Company Profile

MEDNAX, Inc. is a provider of physician services, including newborn, anesthesia, maternal-fetal, teleradiology, pediatric cardiology and other pediatric subspecialty care. As of December 31, 2016, the Company’s national network consisted of over 3,600 affiliated physicians, including over 1,130 physicians providing neonatal clinical care, in 35 states and Puerto Rico, primarily within hospital-based neonatal intensive care units (NICUs), to babies born prematurely or with medical complications. As of December 31, 2016, the Company had over 1,390 affiliated physicians providing anesthesia care to patients in connection with surgical and other procedures, as well as pain management. As of December 31, 2016, the Company had 270 affiliated physicians providing maternal-fetal and obstetrical medical care to expectant mothers experiencing complicated pregnancies primarily in areas where its affiliated neonatal physicians practice.

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