Financial Analysis: Air Methods (AIRM) vs. Tenet Healthcare (THC)

Air Methods (NASDAQ: AIRM) and Tenet Healthcare (NYSE:THC) are both healthcare companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings for Air Methods and Tenet Healthcare, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Air Methods 0 3 1 0 2.25
Tenet Healthcare 0 8 5 0 2.38

Air Methods currently has a consensus target price of $43.00, indicating a potential upside of 0.12%. Tenet Healthcare has a consensus target price of $18.42, indicating a potential upside of 42.21%. Given Tenet Healthcare’s stronger consensus rating and higher probable upside, analysts plainly believe Tenet Healthcare is more favorable than Air Methods.

Earnings and Valuation

This table compares Air Methods and Tenet Healthcare’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Air Methods N/A N/A N/A $2.59 16.58
Tenet Healthcare $19.62 billion 0.07 -$192.00 million ($5.50) -2.35

Air Methods has higher earnings, but lower revenue than Tenet Healthcare. Tenet Healthcare is trading at a lower price-to-earnings ratio than Air Methods, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Air Methods and Tenet Healthcare’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Air Methods 6.67% 14.18% 4.43%
Tenet Healthcare -2.85% -5.61% -0.23%

About Air Methods

Air Methods Corporation is engaged in providing air medical emergency transport services and systems throughout the United States. The Company’s segments include Air Medical Services (AMS), Tourism and United Rotorcraft (UR) Division. As of December 31, 2016, its AMS Division provided air medical transportation services in 41 states to the general population as an independent service (also called community-based services) and to hospitals or other institutions under exclusive operating agreements (also called hospital-based services). It transports persons requiring intensive medical care from either the scene of an accident or general care hospitals to skilled trauma centers or tertiary care centers. As of December 31, 2016, its Air Medical Services Division operated 394 helicopters and 31 fixed wing aircrafts under both Instrument Flight Rules (IFR) and Visual Flight Rules (VFR). As of December 31, 2016, its Tourism Division operated 63 helicopters and two fixed wing aircrafts.

About Tenet Healthcare

Tenet Healthcare Corporation (Tenet) is a healthcare services company. The Company operates regionally focused, integrated healthcare delivery networks in large urban and suburban markets in the United States. The Company’s segments include Hospital Operations and Other, Ambulatory Care and Conifer. As of December 31, 2016, its subsidiaries operated 79 hospitals, including three academic medical centers, two children’s hospitals, two specialty hospitals and one critical access hospital. The Company’s Ambulatory Care segment includes the operations of its USPI joint venture and its Aspen facilities. As of December 31, 2016, Conifer provided one or more of the business process services described above from 20 service centers to more than 800 Tenet and non-Tenet hospital and other clients in over 40 states. As of December 31, 2016, the Company operated 20 short-stay surgical hospitals, over 470 outpatient centers, and nine facilities in the United Kingdom.

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