Critical Review: Healthcare Services Group (HCSG) and Kindred Healthcare (KND)

Healthcare Services Group (NASDAQ: HCSG) and Kindred Healthcare (NYSE:KND) are both business services companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, profitability, dividends, earnings, valuation and institutional ownership.

Volatility & Risk

Healthcare Services Group has a beta of 0.79, indicating that its share price is 21% less volatile than the S&P 500. Comparatively, Kindred Healthcare has a beta of 1.12, indicating that its share price is 12% more volatile than the S&P 500.

Valuation & Earnings

This table compares Healthcare Services Group and Kindred Healthcare’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Healthcare Services Group $1.87 billion 1.55 $88.22 million $1.19 32.92
Kindred Healthcare $6.03 billion 0.13 -$698.35 million $0.34 26.18

Healthcare Services Group has higher earnings, but lower revenue than Kindred Healthcare. Kindred Healthcare is trading at a lower price-to-earnings ratio than Healthcare Services Group, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and target prices for Healthcare Services Group and Kindred Healthcare, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Healthcare Services Group 0 3 1 0 2.25
Kindred Healthcare 1 5 1 0 2.00

Healthcare Services Group presently has a consensus target price of $45.00, indicating a potential upside of 14.85%. Kindred Healthcare has a consensus target price of $9.07, indicating a potential upside of 1.93%. Given Healthcare Services Group’s stronger consensus rating and higher possible upside, equities analysts plainly believe Healthcare Services Group is more favorable than Kindred Healthcare.

Dividends

Healthcare Services Group pays an annual dividend of $0.76 per share and has a dividend yield of 1.9%. Kindred Healthcare does not pay a dividend. Healthcare Services Group pays out 63.9% of its earnings in the form of a dividend. Healthcare Services Group has increased its dividend for 10 consecutive years.

Insider & Institutional Ownership

97.9% of Healthcare Services Group shares are held by institutional investors. Comparatively, 89.0% of Kindred Healthcare shares are held by institutional investors. 4.3% of Healthcare Services Group shares are held by insiders. Comparatively, 3.0% of Kindred Healthcare shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Healthcare Services Group and Kindred Healthcare’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Healthcare Services Group 3.38% 16.99% 10.14%
Kindred Healthcare -11.16% 4.64% 0.50%

Summary

Healthcare Services Group beats Kindred Healthcare on 13 of the 16 factors compared between the two stocks.

Healthcare Services Group Company Profile

Healthcare Services Group, Inc. provides management, administrative, and operating services to the housekeeping, laundry, linen, facility maintenance, and dietary service departments to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. It operates through two segments, Housekeeping and Dietary. The Housekeeping segment engages in the cleaning, disinfecting, and sanitizing of resident rooms and common areas of client's facility, as well as laundering and processing of the bed linens, uniforms, resident personal clothing, and other assorted linen items utilized at a client facility. The Dietary segment is involved in the food purchasing and meal preparation activities, as well as in the provision of professional dietitian services, which include the development of menus that meet the dietary needs of residents. This segment also offers clinical consulting services to facilities. As of December 31, 2017, the company provided its services to 3,500 facilities. Healthcare Services Group, Inc. was founded in 1976 and is based in Bensalem, Pennsylvania.

Kindred Healthcare Company Profile

Kindred Healthcare, Inc. provides healthcare services in the United States. It operates through five segments: Home Health Services, Hospice Services, Hospitals, Kindred Hospital Rehabilitation Services, and RehabCare. The company provides long-term acute care (LTAC) services to post-intensive care and medically complex patients, including the critically ill and suffering from multiple organ system failures most commonly of the cardiovascular, pulmonary, kidney, gastro-intestinal, and cutaneous systems. It also offers home health, hospice, and community care services for patients in various settings comprising their homes, nursing centers, and other residential settings, as well as physician services for patients in home-based settings. In addition, the company operates inpatient rehabilitation hospitals (IRFs) and acute rehabilitation units (ARUs); and provides rehabilitation services, including physical and occupational therapies and speech pathology services to residents and patients of nursing centers, hospitals, outpatient clinics, home health agencies, and assisted living facilities. As of December 31, 2017, it operated 19 IRFs, 99 ARUs, 104 LTAC hospitals, 4 sub-acute units, and 123 outpatient clinics; provided rehabilitative services from 1,616 sites of service in 42 states; and offered Kindred at Home division home health, hospice, and community care services from 608 sites of service in 40 states. The company is headquartered in Louisville, Kentucky.

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