HealthSouth Corporation (NYSE: HLS) and Community Health Systems (NYSE:CYH) are both medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.
Insider & Institutional Ownership
93.0% of HealthSouth Corporation shares are owned by institutional investors. Comparatively, 94.7% of Community Health Systems shares are owned by institutional investors. 1.6% of HealthSouth Corporation shares are owned by company insiders. Comparatively, 4.7% of Community Health Systems shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Valuation and Earnings
This table compares HealthSouth Corporation and Community Health Systems’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|HealthSouth Corporation||$1.93 billion||2.25||$409.30 million||$2.72||16.19|
|Community Health Systems||$17.48 billion||0.05||$1.78 billion||($5.71)||-1.27|
Community Health Systems has higher revenue and earnings than HealthSouth Corporation. Community Health Systems is trading at a lower price-to-earnings ratio than HealthSouth Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares HealthSouth Corporation and Community Health Systems’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Community Health Systems||-3.63%||0.07%||0.01%|
This is a summary of current ratings and recommmendations for HealthSouth Corporation and Community Health Systems, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Community Health Systems||4||12||1||0||1.82|
HealthSouth Corporation currently has a consensus price target of $49.83, indicating a potential upside of 13.13%. Community Health Systems has a consensus price target of $7.52, indicating a potential upside of 3.57%. Given HealthSouth Corporation’s stronger consensus rating and higher possible upside, equities research analysts plainly believe HealthSouth Corporation is more favorable than Community Health Systems.
HealthSouth Corporation pays an annual dividend of $0.96 per share and has a dividend yield of 2.2%. Community Health Systems does not pay a dividend. HealthSouth Corporation pays out 35.3% of its earnings in the form of a dividend. Community Health Systems has increased its dividend for 3 consecutive years.
Risk & Volatility
HealthSouth Corporation has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, Community Health Systems has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500.
HealthSouth Corporation beats Community Health Systems on 9 of the 16 factors compared between the two stocks.
HealthSouth Corporation Company Profile
HealthSouth Corporation (HealthSouth) is a provider of post-acute healthcare services, offering both facility-based and home-based post-acute services in 35 states and Puerto Rico through its network of inpatient rehabilitation hospitals, home health agencies and hospice agencies. The Company manages its operations through segments, including inpatient rehabilitation, and home health and hospice. It is an owner and operator of inpatient rehabilitation hospitals. It provides specialized rehabilitative treatment on both an inpatient and outpatient basis. It offers its home health and hospice services through Encompass Home Health and Hospice business (Encompass). Encompass operates home health and hospice agencies in 25 states, with concentrations in the Southeast, Oklahoma, and Texas. As of December 31, 2016, the Company operated 123 inpatient rehabilitation hospitals. As of December 31, 2016, the Company managed five inpatient rehabilitation units through management contracts.
Community Health Systems Company Profile
Community Health Systems, Inc. is an operator of general acute care hospitals and outpatient facilities in communities across the country. The Company operates through hospital operations segment, which includes its general acute care hospitals and related healthcare entities that provide inpatient and outpatient healthcare services. The Company provides healthcare services through the hospitals that it owns and operates and affiliated businesses in non-urban and selected urban markets throughout the United States. The services provided through its hospitals and affiliated businesses include general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric and rehabilitation services. The Company also provides additional outpatient services at urgent care centers, occupational medicine clinics, imaging centers, cancer centers, ambulatory surgery centers, and home health and hospice agencies.
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