AAC (NYSE: AAC) and AMERIGROUP (NYSE:AGP) are both healthcare companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.

Volatility & Risk

AAC has a beta of 1.95, suggesting that its stock price is 95% more volatile than the S&P 500. Comparatively, AMERIGROUP has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500.

Profitability

This table compares AAC and AMERIGROUP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AAC -0.42% 9.64% 3.73%
AMERIGROUP N/A N/A N/A

Institutional & Insider Ownership

42.6% of AAC shares are held by institutional investors. 37.3% of AAC shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for AAC and AMERIGROUP, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AAC 0 1 2 0 2.67
AMERIGROUP 0 0 0 0 N/A

AAC presently has a consensus target price of $10.00, suggesting a potential upside of 12.49%. Given AAC’s higher probable upside, equities analysts clearly believe AAC is more favorable than AMERIGROUP.

Earnings & Valuation

This table compares AAC and AMERIGROUP’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AAC $279.77 million 0.76 -$580,000.00 ($0.06) -148.17
AMERIGROUP N/A N/A N/A $2.56 3.91

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

Summary

AAC beats AMERIGROUP on 8 of the 10 factors compared between the two stocks.

AAC Company Profile

AAC Holdings, Inc. is a provider of inpatient and outpatient substance abuse treatment services for individuals with drug and alcohol addiction. The Company performs drug testing and diagnostics laboratory services and provides physician services to its clients. As of June 30, 2016, the Company operated 12 residential substance abuse treatment facilities located throughout the United States, focused on delivering clinical care and treatment solutions across 1,139 beds, which includes 636 licensed detoxification beds, and 18 standalone outpatient centers. In addition, the Company focuses on expanding The Oxford Centre facility. As of June 30, 2016, the Company’s capacity at its Forterus treatment facility was 14 beds. The Company is engaged in deploying research-based treatment programs with structured curricula for detoxification, residential treatment, partial hospitalization and intensive outpatient care. The Company is also an Internet marketer in the addiction treatment industry.

AMERIGROUP Company Profile

AMERIGROUP Corporation is a multi-state managed healthcare company focused on serving people who receive healthcare benefits through publicly funded healthcare programs, including Medicaid, Children’s Health Insurance Program (CHIP), Medicaid expansion programs and Medicare Advantage. The Company offers a continuum of care management, including disease management, pharmacy integration, centralized telephonic case management, in-person case management within healthcare facilities, and home visit case management for some of its members. As of December 31, 2011, the Company provided a number of healthcare products to approximately 2,024,000 members. Effective February 1, 2012, it provides managed care services in Louisiana. On May 1, 2012, it acquired Health Plus. In November 2012, the Company sold its Virginia health plan to Inova Health System Foundation. In December 2012, WellPoint Inc acquired the Company.

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