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

Profitability

This table compares The Providence Service and Select Medical’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%
Select Medical 2.21% 11.44% 2.03%

Valuation and Earnings

This table compares The Providence Service and Select Medical’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Providence Service $1.58 billion 0.53 $91.92 million $5.58 11.22
Select Medical $4.29 billion 0.52 $115.41 million $0.73 22.74

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

Volatility and Risk

The Providence Service has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500. Comparatively, Select Medical has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500.

Institutional & Insider Ownership

95.6% of The Providence Service shares are held by institutional investors. Comparatively, 77.9% of Select Medical shares are held by institutional investors. 18.9% of The Providence Service shares are held by company insiders. Comparatively, 19.9% of Select Medical shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for The Providence Service and Select Medical, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Providence Service 0 0 1 0 3.00
Select Medical 1 1 5 0 2.57

The Providence Service presently has a consensus price target of $67.00, suggesting a potential upside of 7.03%. Select Medical has a consensus price target of $20.43, suggesting a potential upside of 23.06%. Given Select Medical’s higher possible upside, analysts plainly believe Select Medical is more favorable than The Providence Service.

Summary

Select Medical beats The Providence Service on 8 of the 14 factors compared between the two stocks.

The Providence Service Company Profile

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.

Select Medical Company Profile

Select Medical Holdings Corporation is an operator of specialty hospitals, outpatient rehabilitation clinics and occupational medicine centers in the United States. The Company’s segments include specialty hospitals, outpatient rehabilitation, Concentra and Other. The specialty hospitals segment consists of hospitals designed to serve the needs of long term acute patients and hospitals designed to serve patients that require intensive medical rehabilitation care. The outpatient rehabilitation segment consists of clinics that provide physical, occupational, and speech rehabilitation services. The Concentra segment consists of medical centers and contract services provided at employer worksites and Department of Veterans Affairs community-based outpatient clinics (CBOCs) that deliver occupational medicine, physical therapy, veteran’s healthcare, and consumer health services. As of December 31, 2016, the Company had operations in 46 states and the District of Columbia.

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