Analyzing Universal American (UAM) and Molina Healthcare (MOH)

Universal American (NYSE: UAM) and Molina Healthcare (NYSE:MOH) are both healthcare companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, risk, profitability, analyst recommendations, institutional ownership and valuation.

Institutional & Insider Ownership

85.7% of Universal American shares are owned by institutional investors. Comparatively, 96.0% of Molina Healthcare shares are owned by institutional investors. 7.7% of Universal American shares are owned by company insiders. Comparatively, 6.2% of Molina Healthcare shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Universal American and Molina Healthcare’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Universal American N/A N/A N/A ($0.86) -11.59
Molina Healthcare $18.51 billion 0.20 $106.00 million ($3.61) -18.05

Molina Healthcare has higher revenue and earnings than Universal American. Molina Healthcare is trading at a lower price-to-earnings ratio than Universal American, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Universal American has a beta of 1.74, suggesting that its share price is 74% more volatile than the S&P 500. Comparatively, Molina Healthcare has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500.

Profitability

This table compares Universal American and Molina Healthcare’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Universal American -5.12% -24.95% -8.23%
Molina Healthcare -1.07% 16.10% 3.35%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Universal American and Molina Healthcare, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal American 0 2 0 0 2.00
Molina Healthcare 3 6 4 0 2.08

Universal American presently has a consensus price target of $10.00, suggesting a potential upside of 0.30%. Molina Healthcare has a consensus price target of $62.54, suggesting a potential downside of 4.02%. Given Universal American’s higher possible upside, equities research analysts plainly believe Universal American is more favorable than Molina Healthcare.

Summary

Molina Healthcare beats Universal American on 7 of the 11 factors compared between the two stocks.

Universal American Company Profile

Universal American Corp. provides an array of health insurance and managed care products and services to people covered by Medicare. The Company’s segments include Medicare Advantage, Management Services Organization (MSO), and Corporate & Other. The Medicare Advantage segment contains the operations of its initiatives in managed care for seniors. It operated 16 Medicare Shared Saving Program Accountable Care Organizations (ACOs) and two Next Generation ACOs, which included approximately 5,200 participating providers with approximately 221,800 assigned Medicare fee-for-service beneficiaries, as of December 31, 2016. The MSO segment supports its physician partnerships in the development of healthcare models, such as ACOs, with a range of capabilities and resources, including technology, analytics, clinical care coordination, regulatory compliance and program administration. It has developed a primary care physician alignment strategy, which is branded as The Healthy Collaboration.

Molina Healthcare Company Profile

Molina Healthcare, Inc. offers Medicaid-related solutions for low-income families and individuals, and assists government agencies in their administration of the Medicaid program. The Company operates through three segments: Health Plans, Molina Medicaid Solutions and Other, which includes its Pathways Health and Community Support LLC (Pathways) business. It arranges healthcare services for persons served by Medicaid, Medicare, the Children’s Health Insurance Program (CHIP) and the Marketplace, and products to assist government agencies in their administration of the Medicaid program. As of December 31, 2016, the Company’s Health Plans segment consisted of health plans in 12 states and the Commonwealth of Puerto Rico, and its direct delivery business. The Molina Medicaid Solutions segment provides support to state government agencies in the administration of their Medicaid programs, including business processing, information technology development, and administrative services.

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