Universal Health Services (NYSE: UHS) and Quest Diagnostics (NYSE:DGX) are both large-cap medical companies, but which is the better business? We will compare the two companies based on the strength of their earnings, institutional ownership, dividends, profitability, analyst recommendations, risk and valuation.
Institutional and Insider Ownership
87.6% of Universal Health Services shares are owned by institutional investors. Comparatively, 88.7% of Quest Diagnostics shares are owned by institutional investors. 13.2% of Universal Health Services shares are owned by insiders. Comparatively, 1.8% of Quest Diagnostics shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This is a breakdown of current recommendations and price targets for Universal Health Services and Quest Diagnostics, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Universal Health Services||0||3||11||0||2.79|
Universal Health Services presently has a consensus price target of $133.29, indicating a potential upside of 8.13%. Quest Diagnostics has a consensus price target of $107.50, indicating a potential upside of 2.42%. Given Universal Health Services’ stronger consensus rating and higher possible upside, research analysts plainly believe Universal Health Services is more favorable than Quest Diagnostics.
Valuation and Earnings
This table compares Universal Health Services and Quest Diagnostics’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Universal Health Services||$10.41 billion||1.12||$752.30 million||$7.81||15.78|
|Quest Diagnostics||$7.71 billion||1.85||$772.00 million||$4.73||22.19|
Quest Diagnostics has lower revenue, but higher earnings than Universal Health Services. Universal Health Services is trading at a lower price-to-earnings ratio than Quest Diagnostics, indicating that it is currently the more affordable of the two stocks.
Universal Health Services pays an annual dividend of $0.40 per share and has a dividend yield of 0.3%. Quest Diagnostics pays an annual dividend of $1.80 per share and has a dividend yield of 1.7%. Universal Health Services pays out 5.1% of its earnings in the form of a dividend. Quest Diagnostics pays out 38.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Universal Health Services has raised its dividend for 6 consecutive years.
Volatility and Risk
Universal Health Services has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500. Comparatively, Quest Diagnostics has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500.
This table compares Universal Health Services and Quest Diagnostics’ 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%|
Universal Health Services beats Quest Diagnostics on 9 of the 17 factors compared between the two stocks.
Universal Health Services Company Profile
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.
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.
Receive News & Ratings for Universal Health Services Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Universal Health Services and related companies with MarketBeat.com's FREE daily email newsletter.