Universal Health Services (NYSE: UHS) and American Renal Associates (NYSE:ARA) are both healthcare companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, valuation and risk.
Insider & Institutional Ownership
87.6% of Universal Health Services shares are held by institutional investors. Comparatively, 91.6% of American Renal Associates shares are held by institutional investors. 13.2% of Universal Health Services shares are held by insiders. Comparatively, 12.6% of American Renal Associates shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Universal Health Services has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, American Renal Associates has a beta of 2.08, meaning that its share price is 108% more volatile than the S&P 500.
This is a breakdown of recent ratings and price targets for Universal Health Services and American Renal Associates, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Universal Health Services||0||3||11||0||2.79|
|American Renal Associates||0||1||2||0||2.67|
Universal Health Services presently has a consensus target price of $133.29, indicating a potential upside of 5.55%. American Renal Associates has a consensus target price of $23.50, indicating a potential upside of 1.03%. Given Universal Health Services’ stronger consensus rating and higher probable upside, equities analysts plainly believe Universal Health Services is more favorable than American Renal Associates.
This table compares Universal Health Services and American Renal Associates’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Universal Health Services||7.23%||15.06%||6.98%|
|American Renal Associates||-1.00%||14.51%||2.06%|
Universal Health Services pays an annual dividend of $0.40 per share and has a dividend yield of 0.3%. American Renal Associates does not pay a dividend. Universal Health Services pays out 5.3% of its earnings in the form of a dividend.
Earnings & Valuation
This table compares Universal Health Services and American Renal Associates’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Universal Health Services||$10.41 billion||1.15||$752.30 million||$7.49||16.86|
|American Renal Associates||$745.11 million||0.98||$4.85 million||($0.26)||-89.46|
Universal Health Services has higher revenue and earnings than American Renal Associates. American Renal Associates is trading at a lower price-to-earnings ratio than Universal Health Services, indicating that it is currently the more affordable of the two stocks.
Universal Health Services beats American Renal Associates on 13 of the 16 factors compared between the two stocks.
About Universal Health Services
Universal Health Services, Inc. is a holding company. The Company’s principal business is owning and operating, through its subsidiaries, acute care hospitals and outpatient facilities, and behavioral healthcare facilities. The Company’s segments include Acute Care Hospital Services, Behavioral Health Services and Other. As of February 28, 2017, the Company owned and/or operated 319 inpatient facilities, and 33 outpatient and other facilities, located in 37 states, Washington, District of Columbia, the United Kingdom, Puerto Rico and the United States Virgin Islands. The Company’s hospitals provide a range of services, such as oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. As of February 28, 2017, its acute care facilities located in the United States included 26 inpatient acute care hospitals; four free-standing emergency departments, and four outpatient surgery/cancer care centers and one surgical hospital.
About American Renal Associates
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.
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