Quest Diagnostics (NYSE:DGX) and Chemed (NYSE:CHE) are both medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, valuation, institutional ownership and earnings.
Risk and Volatility
Quest Diagnostics has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500. Comparatively, Chemed has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500.
Earnings and Valuation
This table compares Quest Diagnostics and Chemed's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Quest Diagnostics | $7.73 billion | 2.00 | $858 million | $6.56 | 17.62 |
| Chemed | $1.94 billion | 3.66 | $219.92 million | $13.95 | 31.91 |
Quest Diagnostics has higher revenue and earnings than Chemed. Quest Diagnostics is trading at a lower price-to-earnings ratio than Chemed, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Quest Diagnostics and Chemed's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Quest Diagnostics | 13.22% | 19.23% | 8.77% |
| Chemed | 13.11% | 38.13% | 21.70% |
Dividends
Quest Diagnostics pays an annual dividend of $2.24 per share and has a dividend yield of 1.9%. Chemed pays an annual dividend of $1.36 per share and has a dividend yield of 0.3%. Quest Diagnostics pays out 34.1% of its earnings in the form of a dividend. Chemed pays out 9.7% 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. Quest Diagnostics has raised its dividend for 1 consecutive years and Chemed has raised its dividend for 12 consecutive years.
Institutional & Insider Ownership
85.7% of Quest Diagnostics shares are held by institutional investors. Comparatively, 86.0% of Chemed shares are held by institutional investors. 1.5% of Quest Diagnostics shares are held by insiders. Comparatively, 4.0% of Chemed shares are held by 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.
Analyst Recommendations
This is a summary of recent recommendations and price targets for Quest Diagnostics and Chemed, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Quest Diagnostics | 0 | 9 | 6 | 0 | 2.40 |
| Chemed | 0 | 0 | 2 | 0 | 3.00 |
Quest Diagnostics presently has a consensus target price of $129.00, indicating a potential upside of 11.60%. Chemed has a consensus target price of $557.50, indicating a potential upside of 25.22%. Given Chemed's stronger consensus rating and higher probable upside, analysts clearly believe Chemed is more favorable than Quest Diagnostics.
Summary
Chemed beats Quest Diagnostics on 11 of the 17 factors compared between the two stocks.
