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

Profitability

This table compares The Ensign Group and Premier’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Ensign Group 2.55% 13.51% 6.54%
Premier 31.41% -13.95% 10.48%

Institutional and Insider Ownership

84.4% of The Ensign Group shares are held by institutional investors. 6.2% of The Ensign Group shares are held by company insiders. Comparatively, 17.1% of Premier shares are held 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.

Earnings and Valuation

This table compares The Ensign Group and Premier’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Ensign Group $1.71 billion 0.67 $119.84 million $0.83 27.35
Premier $1.35 billion 1.36 $395.31 million $0.07 505.64

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

Analyst Recommendations

This is a summary of current recommendations for The Ensign Group and Premier, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Ensign Group 2 0 4 0 2.33
Premier 1 0 12 0 2.85

The Ensign Group presently has a consensus price target of $22.50, indicating a potential downside of 0.88%. Premier has a consensus price target of $38.80, indicating a potential upside of 9.64%. Given Premier’s stronger consensus rating and higher probable upside, analysts clearly believe Premier is more favorable than The Ensign Group.

Dividends

The Ensign Group pays an annual dividend of $0.17 per share and has a dividend yield of 0.7%. Premier does not pay a dividend. The Ensign Group pays out 20.5% of its earnings in the form of a dividend.

Volatility and Risk

The Ensign Group has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500. Comparatively, Premier has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500.

Summary

Premier beats The Ensign Group on 9 of the 16 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 May 11, 2017, it operated in 215 healthcare facilities. The Company operates across 14 states.

About Premier

Premier, Inc. is a healthcare improvement company. The Company is uniting an alliance of approximately 3,750 United States hospitals and more than 130,000 other provider organizations to transform healthcare. The Company operates healthcare group purchasing organizations and also provides integrated data and analytics, supply chain solutions, advisory services, performance improvement collaborative and other services. The Company plays a role in the healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide.

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