Humana (NYSE:HUM) and Cardinal Health (NYSE:CAH) are both large-cap medical companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, valuation and earnings.
Risk and Volatility
Humana has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500. Comparatively, Cardinal Health has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500.
Valuation and Earnings
This table compares Humana and Cardinal Health's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Humana | $64.89 billion | 0.90 | $2.71 billion | $17.87 | 25.21 |
| Cardinal Health | $152.92 billion | 0.11 | $-3,696,000,000.00 | $5.45 | 10.36 |
Humana has higher earnings, but lower revenue than Cardinal Health. Cardinal Health is trading at a lower price-to-earnings ratio than Humana, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
91.9% of Humana shares are owned by institutional investors. Comparatively, 82.6% of Cardinal Health shares are owned by institutional investors. 0.4% of Humana shares are owned by insiders. Comparatively, 0.4% of Cardinal Health shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Analyst Ratings
This is a breakdown of current ratings and target prices for Humana and Cardinal Health, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Humana | 0 | 4 | 11 | 0 | 2.73 |
| Cardinal Health | 0 | 3 | 5 | 0 | 2.63 |
Humana presently has a consensus price target of $470.6316, indicating a potential upside of 4.48%. Cardinal Health has a consensus price target of $62.2857, indicating a potential upside of 10.34%. Given Cardinal Health's higher possible upside, analysts plainly believe Cardinal Health is more favorable than Humana.
Dividends
Humana pays an annual dividend of $2.80 per share and has a dividend yield of 0.6%. Cardinal Health pays an annual dividend of $1.94 per share and has a dividend yield of 3.4%. Humana pays out 15.7% of its earnings in the form of a dividend. Cardinal Health pays out 35.6% 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. Humana has increased its dividend for 4 consecutive years and Cardinal Health has increased its dividend for 34 consecutive years. Cardinal Health is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Humana and Cardinal Health's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Humana | 5.58% | 22.74% | 8.82% |
| Cardinal Health | 0.63% | 123.28% | 4.06% |
Summary
Humana beats Cardinal Health on 10 of the 17 factors compared between the two stocks.
