HMS (NASDAQ: HMSY) and Universal Health Services (NYSE:UHS) are both medical companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitability, analyst recommendations and valuation.

Earnings and Valuation

This table compares HMS and Universal Health Services’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HMS $496.01 million 2.57 $37.63 million $0.29 52.31
Universal Health Services $9.77 billion 1.12 $702.40 million $7.28 15.88

Universal Health Services has higher revenue and earnings than HMS. Universal Health Services is trading at a lower price-to-earnings ratio than HMS, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

HMS has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500. Comparatively, Universal Health Services has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for HMS and Universal Health Services, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HMS 0 4 4 1 2.67
Universal Health Services 0 3 12 0 2.80

HMS presently has a consensus target price of $20.19, suggesting a potential upside of 33.08%. Universal Health Services has a consensus target price of $130.93, suggesting a potential upside of 13.25%. Given HMS’s higher possible upside, equities research analysts plainly believe HMS is more favorable than Universal Health Services.

Profitability

This table compares HMS and Universal Health Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HMS 4.94% 7.93% 4.93%
Universal Health Services 6.90% 15.13% 6.92%

Dividends

Universal Health Services pays an annual dividend of $0.40 per share and has a dividend yield of 0.3%. HMS does not pay a dividend. Universal Health Services pays out 5.5% of its earnings in the form of a dividend.

Insider and Institutional Ownership

94.2% of HMS shares are held by institutional investors. Comparatively, 86.0% of Universal Health Services shares are held by institutional investors. 3.2% of HMS shares are held by insiders. Comparatively, 13.2% of Universal Health Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Universal Health Services beats HMS on 11 of the 17 factors compared between the two stocks.

About HMS

HMS Holdings Corp. is a holding company. The Company, through its subsidiaries, operates in the United States healthcare insurance benefit cost containment marketplace. It provides coordination of benefits services to government, and private healthcare payers and sponsors. Its payment integrity services ensure that healthcare claims billed are accurate and appropriate. It offers services to state Medicaid agencies, government health agencies and health plans, including Medicaid managed care, Medicare Advantage and group and individual health lines of business; government and private employers; and other healthcare payers and sponsors, including child support agencies. It serves approximately 45 state Medicaid programs and the District of Columbia, and government health agencies, including Centers for Medicare & Medicaid Services (CMS) and the Veterans Health Administration (VHA). It also provides services to approximately 250 health plans and supports their multiple lines of business.

About Universal Health Services

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.

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