American Renal Associates (NYSE: ARA) and Diplomat Pharmacy (NYSE:DPLO) are both small-cap medical companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, dividends, earnings and analyst recommendations.
Risk & Volatility
American Renal Associates has a beta of 3.55, suggesting that its share price is 255% more volatile than the S&P 500. Comparatively, Diplomat Pharmacy has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.
93.7% of American Renal Associates shares are held by institutional investors. Comparatively, 69.3% of Diplomat Pharmacy shares are held by institutional investors. 12.6% of American Renal Associates shares are held by insiders. Comparatively, 30.2% of Diplomat Pharmacy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation & Earnings
This table compares American Renal Associates and Diplomat Pharmacy’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American Renal Associates||$749.77 million||0.75||-$380,000.00||($0.33)||-54.42|
|Diplomat Pharmacy||$4.41 billion||0.36||$28.27 million||$0.10||231.40|
Diplomat Pharmacy has higher revenue and earnings than American Renal Associates. American Renal Associates is trading at a lower price-to-earnings ratio than Diplomat Pharmacy, indicating that it is currently the more affordable of the two stocks.
This table compares American Renal Associates and Diplomat Pharmacy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Renal Associates||-2.15%||15.80%||2.34%|
This is a breakdown of current recommendations and price targets for American Renal Associates and Diplomat Pharmacy, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Renal Associates||0||0||4||0||3.00|
American Renal Associates presently has a consensus price target of $20.00, indicating a potential upside of 11.36%. Diplomat Pharmacy has a consensus price target of $23.95, indicating a potential upside of 3.50%. Given American Renal Associates’ stronger consensus rating and higher probable upside, equities research analysts plainly believe American Renal Associates is more favorable than Diplomat Pharmacy.
Diplomat Pharmacy beats American Renal Associates on 7 of the 13 factors compared between the two stocks.
American Renal Associates Company Profile
American Renal Associates Holdings, Inc. is a dialysis service provider in the United States focused on joint venture (JV) partnerships with physicians. As of December 31, 2016, the Company owned and operated 214 dialysis clinics in partnership with 379 nephrologist partners treating over 14,000 patients in 25 states and the District of Columbia. The Company operates its dialysis clinics exclusively through a JV model, in which it partners primarily with local nephrologists to develop, own and operate dialysis clinics, while the providers of the majority of dialysis services in the United States operate through a combination of subsidiaries and joint ventures. It provides patient care and clinical outcomes to patients suffering from end-stage renal disease (ESRD). Its clinics offer both in center and home dialysis options to meet the needs of patients. Its clinics primarily provide in center hemodialysis treatments and ancillary items and services.
Diplomat Pharmacy Company Profile
Diplomat Pharmacy, Inc. (Diplomat) operates a specialty pharmacy business, which stocks, dispenses and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. The Company operates through specialty pharmacy services segment. The Company’s primary focus is on medication management programs for individuals with chronic diseases, including oncology, immunology, hepatitis, multiple sclerosis, specialty infusion therapy, and various other serious and/or long-term conditions. The Company provides specialty pharmacy support services to a national network of retailers and independent pharmacy groups, hospitals and health systems. The Company offers various services, such as specialty drug dispensing, retail specialty services, hospital and health system services, and hub services. The Company’s patient care system is used to coordinate and track patient adherence and safety.
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