R1 RCM (RCM) & Sodexo (SDXAY) Critical Analysis

R1 RCM (NASDAQ: RCM) and Sodexo (OTCMKTS:SDXAY) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, valuation, dividends, risk and profitability.

Risk and Volatility

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R1 RCM has a beta of -0.75, indicating that its stock price is 175% less volatile than the S&P 500. Comparatively, Sodexo has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500.

Profitability

This table compares R1 RCM and Sodexo’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
R1 RCM -13.07% -31.68% -6.42%
Sodexo N/A N/A N/A

Valuation and Earnings

This table compares R1 RCM and Sodexo’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
R1 RCM $449.80 million 1.64 -$58.80 million ($0.44) -16.14
Sodexo $24.32 billion 0.60 $794.57 million $6.49 2.96

Sodexo has higher revenue and earnings than R1 RCM. R1 RCM is trading at a lower price-to-earnings ratio than Sodexo, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

49.3% of R1 RCM shares are owned by institutional investors. Comparatively, 0.1% of Sodexo shares are owned by institutional investors. 62.0% of R1 RCM shares are owned by insiders. Comparatively, 1.0% of Sodexo shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Sodexo pays an annual dividend of $0.55 per share and has a dividend yield of 2.9%. R1 RCM does not pay a dividend. Sodexo pays out 8.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current recommendations for R1 RCM and Sodexo, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
R1 RCM 0 2 1 0 2.33
Sodexo 0 3 2 0 2.40

R1 RCM currently has a consensus price target of $8.67, suggesting a potential upside of 22.07%. Given R1 RCM’s higher probable upside, analysts clearly believe R1 RCM is more favorable than Sodexo.

Summary

Sodexo beats R1 RCM on 10 of the 15 factors compared between the two stocks.

R1 RCM Company Profile

R1 RCM Inc. is a provider of revenue cycle management (RCM) and physician advisory services (PAS) to healthcare providers. The Company is engaged in providing management services of revenue cycle operations for the United States-based hospitals and other medical services providers. Its primary service offering consists of end-to-end RCM, which the Company deploys through a co-managed relationship or an operating partner relationship. The Company’s PAS offering assists hospitals in complying with payer requirements regarding whether to classify a hospital visit as an in-patient or an out-patient observation case for billing purposes. The Company also provides customers with retrospective appeal management service support for both governmental and commercial payers. Its physicians conduct detailed retrospective reviews of medical records to identify medical necessity for hospital services and the required documentation to support an appeal.

Sodexo Company Profile

Sodexo S.A. develops, manages, and delivers on-site services, benefits and rewards services, and personal and home services worldwide. The company offers various on-site services, including construction, reception, medical equipment sterilization, cleaning, food, event management, and prisoner rehabilitation services to corporates, governments, healthcare and seniors, universities, schools, energy and resources, and sports and leisure customers. It also provides benefits and rewards services, which comprise employee benefits, incentive and recognition programs, expense management, public benefits, and gift cards and boxes. In addition, the company offers concierge services; and in-home care services comprising assistance with eating, bathing, walking, and housecleaning, as well as helps in maintaining social contact and relationships. Further, it provides grocery shopping, going to work, and a doctor's appointment services; and operates child day-care centers. The company was formerly known as Sodexho Alliance and changed its name to Sodexo S.A. in 2008. Sodexo S.A. was founded in 1966 and is headquartered in Issy-les-Moulineaux, France.

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