R1 RCM (NASDAQ: RCM) and Servicemaster Global (NYSE:SERV) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, earnings, profitability, institutional ownership and analyst recommendations.

Profitability

This table compares R1 RCM and Servicemaster Global’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
R1 RCM -14.47% -45.77% -7.12%
Servicemaster Global 17.35% 29.91% 5.38%

Institutional and Insider Ownership

47.4% of R1 RCM shares are owned by institutional investors. 59.4% of R1 RCM shares are owned by company insiders. Comparatively, 1.2% of Servicemaster Global shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares R1 RCM and Servicemaster Global’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
R1 RCM $449.80 million 2.17 -$58.80 million ($0.44) -20.27
Servicemaster Global $2.91 billion 2.77 $510.00 million $2.11 28.20

Servicemaster Global has higher revenue and earnings than R1 RCM. R1 RCM is trading at a lower price-to-earnings ratio than Servicemaster Global, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings for R1 RCM and Servicemaster Global, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
R1 RCM 0 1 2 0 2.67
Servicemaster Global 0 2 9 0 2.82

R1 RCM presently has a consensus target price of $9.33, suggesting a potential upside of 4.63%. Servicemaster Global has a consensus target price of $58.44, suggesting a potential downside of 1.77%. Given R1 RCM’s higher possible upside, equities research analysts plainly believe R1 RCM is more favorable than Servicemaster Global.

Risk & Volatility

R1 RCM has a beta of -0.76, meaning that its stock price is 176% less volatile than the S&P 500. Comparatively, Servicemaster Global has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500.

Summary

Servicemaster Global beats R1 RCM on 10 of the 13 factors compared between the two stocks.

R1 RCM Company Profile

R1 RCM Inc. provides revenue cycle management (RCM) for healthcare providers in the United States. It offers end-to-end RCM services to manage their revenue cycle operations, which encompass patient registration, insurance and benefit verification, medical treatment documentation and coding, and bill preparation and collection from patients and payers. The company also provides modular services comprising physician advisory services, which assists hospitals in complying with payer requirements regarding whether to classify a hospital visit as an in-patient or an out-patient observation case for billing purposes; and revenue capture services, including charge capture, charge description master maintenance, and pricing services. It serves single or multi-hospital healthcare systems, and their respective affiliated ambulatory clinics and physician practice groups. The company was formerly known as Accretive Health, Inc. and changed its name to R1 RCM Inc. in January 2017. R1 RCM Inc. was founded in 2003 and is headquartered in Chicago, Illinois.

Servicemaster Global Company Profile

ServiceMaster Global Holdings, Inc. provides residential and commercial services in the United States. The company operates through three segments: Terminix, American Home Shield, and the Franchise Services Group. The Terminix segment offers termite and pest control services, including termite remediation, annual termite inspection, and prevention treatments with damage claim guarantees, periodic pest control services, insulation services, mosquito control, crawlspace encapsulation, and wildlife exclusion. The American Home Shield segment provides home service plans that cover the repair or replacement of household systems and appliances, such as electrical, plumbing, central heating and air conditioning systems, water heaters, refrigerators, dishwashers, and ranges/ovens/cooktops. The Franchise Services Group segment offers disaster restoration, janitorial, residential cleaning, cabinet and wood furniture repair, and home inspection services through franchise under the ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic, and AmeriSpec brands. The company markets its services to homeowners and businesses through the Internet, direct mail, television and radio advertising, print advertisements, marketing partnerships, telemarketing, and various social media channels and through national sales teams, as well as through various participants in the residential real estate marketplace, such as real estate brokerages, financial institutions, and insurance carrier. The company was founded in 1929 and is headquartered in Memphis, Tennessee.

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