Universal Health Services (NYSE: UHS) and Diplomat Pharmacy (NYSE:DPLO) are both healthcare companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, risk, institutional ownership, earnings and analyst recommendations.
Institutional and Insider Ownership
86.1% of Universal Health Services shares are held by institutional investors. Comparatively, 73.4% of Diplomat Pharmacy shares are held by institutional investors. 13.2% of Universal Health Services shares are held by company insiders. Comparatively, 30.2% of Diplomat Pharmacy shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Universal Health Services pays an annual dividend of $0.40 per share and has a dividend yield of 0.3%. Diplomat Pharmacy does not pay a dividend. Universal Health Services pays out 5.5% of its earnings in the form of a dividend.
This table compares Universal Health Services and Diplomat Pharmacy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Universal Health Services||6.90%||15.13%||6.92%|
Valuation and Earnings
This table compares Universal Health Services and Diplomat Pharmacy’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Universal Health Services||$9.77 billion||1.13||$702.40 million||$7.27||16.06|
|Diplomat Pharmacy||$4.41 billion||0.36||$28.27 million||$0.12||193.92|
Universal Health Services has higher revenue and earnings than Diplomat Pharmacy. Universal Health Services is trading at a lower price-to-earnings ratio than Diplomat Pharmacy, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings for Universal Health Services and Diplomat Pharmacy, as provided 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 currently has a consensus target price of $130.93, indicating a potential upside of 12.17%. Diplomat Pharmacy has a consensus target price of $23.95, indicating a potential upside of 2.92%. Given Universal Health Services’ stronger consensus rating and higher probable upside, equities analysts plainly believe Universal Health Services is more favorable than Diplomat Pharmacy.
Risk and Volatility
Universal Health Services has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500. Comparatively, Diplomat Pharmacy has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.
Universal Health Services beats Diplomat Pharmacy on 12 of the 16 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.
Diplomat Pharmacy Company Profile
Diplomat Pharmacy, Inc. (Diplomat) operates a specialty pharmacy business, which stocks, dispenses and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. The Company operates through specialty pharmacy services segment. The Company’s primary focus is on medication management programs for individuals with chronic diseases, including oncology, immunology, hepatitis, multiple sclerosis, specialty infusion therapy, and various other serious and/or long-term conditions. The Company provides specialty pharmacy support services to a national network of retailers and independent pharmacy groups, hospitals and health systems. The Company offers various services, such as specialty drug dispensing, retail specialty services, hospital and health system services, and hub services. The Company’s patient care system is used to coordinate and track patient adherence and safety.
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