The Providence Service (NASDAQ: PRSC) and MEDNAX (NYSE:MD) are both consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, valuation and institutional ownership.

Risk & Volatility

The Providence Service has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, MEDNAX has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for The Providence Service and MEDNAX, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Providence Service 0 1 1 0 2.50
MEDNAX 1 8 3 0 2.17

The Providence Service currently has a consensus target price of $67.00, suggesting a potential upside of 3.27%. MEDNAX has a consensus target price of $53.82, suggesting a potential downside of 0.56%. Given The Providence Service’s stronger consensus rating and higher probable upside, analysts plainly believe The Providence Service is more favorable than MEDNAX.

Earnings and Valuation

This table compares The Providence Service and MEDNAX’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Providence Service $1.58 billion 0.55 $91.92 million $5.58 11.63
MEDNAX $3.18 billion 1.59 $324.91 million $2.83 19.12

MEDNAX has higher revenue and earnings than The Providence Service. The Providence Service is trading at a lower price-to-earnings ratio than MEDNAX, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

95.5% of The Providence Service shares are held by institutional investors. Comparatively, 98.7% of MEDNAX shares are held by institutional investors. 18.9% of The Providence Service shares are held by company insiders. Comparatively, 2.4% of MEDNAX shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares The Providence Service and MEDNAX’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Providence Service 4.91% 6.29% 2.63%
MEDNAX 7.76% 10.80% 5.57%

Summary

MEDNAX beats The Providence Service on 9 of the 14 factors compared between the two stocks.

About The Providence Service

The Providence Service Corporation (Providence) is a holding company. The Company, through its subsidiaries, is engaged in the provision of healthcare and workforce development services for public and private sector entities. The Company’s segments include Non-Emergency Transportation Services (NET Services), Workforce Development Services (WD Services) and Matrix Investment. NET Services segment includes nationwide provider of non-emergency medical transportation programs for state governments and managed care organizations. WD Services segment is a global provider of employment preparation and placement and legal offender rehabilitation services to eligible participants of government sponsored programs. Matrix Investment segment includes minority interest in nationwide provider of in-home care optimization and management solutions, including comprehensive health assessments (CHAs), to members of managed care organizations, accounted for as an equity method investment.

About MEDNAX

MEDNAX, Inc. is a provider of physician services, including newborn, anesthesia, maternal-fetal, teleradiology, pediatric cardiology and other pediatric subspecialty care. As of December 31, 2016, the Company’s national network consisted of over 3,600 affiliated physicians, including over 1,130 physicians providing neonatal clinical care, in 35 states and Puerto Rico, primarily within hospital-based neonatal intensive care units (NICUs), to babies born prematurely or with medical complications. As of December 31, 2016, the Company had over 1,390 affiliated physicians providing anesthesia care to patients in connection with surgical and other procedures, as well as pain management. As of December 31, 2016, the Company had 270 affiliated physicians providing maternal-fetal and obstetrical medical care to expectant mothers experiencing complicated pregnancies primarily in areas where its affiliated neonatal physicians practice.

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