Analyzing Chemed (CHE) and Quest Diagnostics (DGX)

Chemed (NYSE: CHE) and Quest Diagnostics (NYSE:DGX) are both mid-cap medical companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, risk, earnings, analyst recommendations, dividends and valuation.

Insider & Institutional Ownership

97.7% of Chemed shares are owned by institutional investors. Comparatively, 88.9% of Quest Diagnostics shares are owned by institutional investors. 4.9% of Chemed shares are owned by company insiders. Comparatively, 1.8% of Quest Diagnostics shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Chemed and Quest Diagnostics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chemed 0 2 1 0 2.33
Quest Diagnostics 1 12 6 0 2.26

Chemed currently has a consensus target price of $228.50, suggesting a potential downside of 14.24%. Quest Diagnostics has a consensus target price of $104.72, suggesting a potential upside of 1.61%. Given Quest Diagnostics’ higher possible upside, analysts plainly believe Quest Diagnostics is more favorable than Chemed.

Dividends

Chemed pays an annual dividend of $1.12 per share and has a dividend yield of 0.4%. Quest Diagnostics pays an annual dividend of $1.80 per share and has a dividend yield of 1.7%. Chemed pays out 24.9% of its earnings in the form of a dividend. Quest Diagnostics pays out 37.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Chemed has increased its dividend for 9 consecutive years and Quest Diagnostics has increased its dividend for 6 consecutive years.

Earnings & Valuation

This table compares Chemed and Quest Diagnostics’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Chemed $1.58 billion 2.70 $108.74 million $4.50 59.21
Quest Diagnostics $7.52 billion 1.87 $645.00 million $4.77 21.61

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

Profitability

This table compares Chemed and Quest Diagnostics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chemed 4.62% 27.69% 15.16%
Quest Diagnostics 8.82% 15.53% 7.18%

Risk & Volatility

Chemed has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500. Comparatively, Quest Diagnostics has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500.

Summary

Chemed beats Quest Diagnostics on 10 of the 17 factors compared between the two stocks.

About Chemed

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.

About Quest Diagnostics

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.

Receive News & Ratings for Chemed Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Chemed and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply