Critical Contrast: Quest Diagnostics (DGX) and Its Peers

Quest Diagnostics (NYSE: DGX) is one of 49 publicly-traded companies in the “Healthcare Facilities & Services” industry, but how does it contrast to its rivals? We will compare Quest Diagnostics to related companies based on the strength of its institutional ownership, profitability, analyst recommendations, earnings, valuation, dividends and risk.

Insider and Institutional Ownership

87.0% of Quest Diagnostics shares are held by institutional investors. Comparatively, 70.5% of shares of all “Healthcare Facilities & Services” companies are held by institutional investors. 1.8% of Quest Diagnostics shares are held by company insiders. Comparatively, 14.5% of shares of all “Healthcare Facilities & Services” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Quest Diagnostics and its rivals gross revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Quest Diagnostics $7.59 billion $1.44 billion 18.56
Quest Diagnostics Competitors $5.72 billion $906.68 million 37.19

Quest Diagnostics has higher revenue and earnings than its rivals. Quest Diagnostics is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Dividends

Quest Diagnostics pays an annual dividend of $1.80 per share and has a dividend yield of 2.0%. Quest Diagnostics pays out 36.3% of its earnings in the form of a dividend. As a group, “Healthcare Facilities & Services” companies pay a dividend yield of 1.0% and pay out 59.1% of their earnings in the form of a dividend. Quest Diagnostics has raised its dividend for 5 consecutive years. Quest Diagnostics is clearly a better dividend stock than its rivals, given its higher yield and lower payout ratio.

Risk and Volatility

Quest Diagnostics has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, Quest Diagnostics’ rivals have a beta of 1.01, indicating that their average share price is 1% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Quest Diagnostics and its rivals, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quest Diagnostics 1 10 6 0 2.29
Quest Diagnostics Competitors 188 1272 1800 31 2.51

Quest Diagnostics currently has a consensus price target of $106.79, indicating a potential upside of 16.02%. As a group, “Healthcare Facilities & Services” companies have a potential downside of 3.79%. Given Quest Diagnostics’ higher probable upside, equities analysts clearly believe Quest Diagnostics is more favorable than its rivals.

Profitability

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

Net Margins Return on Equity Return on Assets
Quest Diagnostics 9.28% 15.66% 7.24%
Quest Diagnostics Competitors 6.93% 0.33% 0.51%

Summary

Quest Diagnostics beats its rivals on 9 of the 15 factors compared.

Quest Diagnostics Company Profile

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.

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