Critical Comparison: The Ensign Group (ENSG) versus Five Star Senior Living (FVE)

The Ensign Group (NASDAQ: ENSG) and Five Star Senior Living (NASDAQ:FVE) are both small-cap medical companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.

Risk and Volatility

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The Ensign Group has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, Five Star Senior Living has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Profitability

This table compares The Ensign Group and Five Star Senior Living’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Ensign Group 2.19% 13.87% 6.35%
Five Star Senior Living -1.50% -17.53% -5.34%

Dividends

The Ensign Group pays an annual dividend of $0.18 per share and has a dividend yield of 0.6%. Five Star Senior Living does not pay a dividend. The Ensign Group pays out 15.0% of its earnings in the form of a dividend.

Insider and Institutional Ownership

86.5% of The Ensign Group shares are owned by institutional investors. Comparatively, 21.5% of Five Star Senior Living shares are owned by institutional investors. 6.2% of The Ensign Group shares are owned by insiders. Comparatively, 39.7% of Five Star Senior Living shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares The Ensign Group and Five Star Senior Living’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
The Ensign Group $1.85 billion 0.79 $40.47 million $1.20 23.41
Five Star Senior Living $1.40 billion 0.05 -$20.90 million ($0.53) -2.45

The Ensign Group has higher revenue and earnings than Five Star Senior Living. Five Star Senior Living is trading at a lower price-to-earnings ratio than The Ensign Group, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for The Ensign Group and Five Star Senior Living, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Ensign Group 1 1 3 0 2.40
Five Star Senior Living 0 0 2 0 3.00

The Ensign Group currently has a consensus target price of $26.25, suggesting a potential downside of 6.55%. Five Star Senior Living has a consensus target price of $3.75, suggesting a potential upside of 188.46%. Given Five Star Senior Living’s stronger consensus rating and higher probable upside, analysts clearly believe Five Star Senior Living is more favorable than The Ensign Group.

Summary

The Ensign Group beats Five Star Senior Living on 10 of the 15 factors compared between the two stocks.

About The Ensign Group

The Ensign Group, Inc., through its operating subsidiaries, provides healthcare services across the post-acute care continuum, as well as other ancillary businesses located in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, Oregon, South Carolina, Texas, Utah, Washington and Wisconsin. The Company’s subsidiaries provide skilled nursing, assisted living, home health and hospice, and other ancillary services. Its segments include transitional and skilled services segment, which includes the operation of skilled nursing facilities; assisted and independent living services segment, which includes the operation of assisted and independent living facilities; home health and hospice services segment, which includes its home health, home care and hospice businesses, and all other segment, which includes mobile diagnostics and other ancillary operations. As of July10, 2017, it operated in 226 healthcare facilities.

About Five Star Senior Living

Five Star Senior Living Inc. operates and manages senior living communities in the United States. Its senior living communities comprise independent living communities, assisted living communities, and skilled nursing facilities (SNFs). The company offers nursing and healthcare services; and rehabilitation and wellness services. As of December 31, 2016, it operated 283 senior living communities consisting of 31,830 living units comprising 253 primarily independent and assisted living communities with 29,229 living units, and 30 SNFs with 2,601 living units located in 32 states. The company was formerly known as Five Star Quality Care, Inc. and changed its name to Five Star Senior Living Inc. on March 3, 2017. Five Star Senior Living Inc. was founded in 2000 and is based in Newton, Massachusetts.

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