American Renal Associates Holdings (NYSE: ARA) and Fresenius Medical Care Corporation (NYSE:FMS) are both medical companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, valuation, earnings, profitabiliy, analyst recommendations, dividends and institutional ownership.

Insider and Institutional Ownership

90.9% of American Renal Associates Holdings shares are held by institutional investors. Comparatively, 2.8% of Fresenius Medical Care Corporation shares are held by institutional investors. 12.6% of American Renal Associates Holdings shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares American Renal Associates Holdings and Fresenius Medical Care Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Renal Associates Holdings -2.13% 20.97% 2.91%
Fresenius Medical Care Corporation 7.06% 11.57% 4.97%

Valuation & Earnings

This table compares American Renal Associates Holdings and Fresenius Medical Care Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Renal Associates Holdings $754.66 million 0.60 $151.64 million ($0.83) -17.54
Fresenius Medical Care Corporation $19.95 billion 1.41 $3.64 billion $2.18 21.02

Fresenius Medical Care Corporation has higher revenue and earnings than American Renal Associates Holdings. American Renal Associates Holdings is trading at a lower price-to-earnings ratio than Fresenius Medical Care Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Fresenius Medical Care Corporation pays an annual dividend of $0.37 per share and has a dividend yield of 0.8%. American Renal Associates Holdings does not pay a dividend. Fresenius Medical Care Corporation pays out 17.0% of its earnings in the form of a dividend.

Volatility and Risk

American Renal Associates Holdings has a beta of 3.77, indicating that its stock price is 277% more volatile than the S&P 500. Comparatively, Fresenius Medical Care Corporation has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for American Renal Associates Holdings and Fresenius Medical Care Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Renal Associates Holdings 1 0 5 0 2.67
Fresenius Medical Care Corporation 0 3 8 0 2.73

American Renal Associates Holdings presently has a consensus target price of $27.33, indicating a potential upside of 87.73%. Fresenius Medical Care Corporation has a consensus target price of $46.00, indicating a potential upside of 0.39%. Given American Renal Associates Holdings’ higher possible upside, analysts clearly believe American Renal Associates Holdings is more favorable than Fresenius Medical Care Corporation.

Summary

Fresenius Medical Care Corporation beats American Renal Associates Holdings on 10 of the 16 factors compared between the two stocks.

American Renal Associates Holdings Company Profile

American Renal Associates Holdings, Inc. is a dialysis service provider in the United States focused on joint venture (JV) partnerships with physicians. As of December 31, 2016, the Company owned and operated 214 dialysis clinics in partnership with 379 nephrologist partners treating over 14,000 patients in 25 states and the District of Columbia. The Company operates its dialysis clinics exclusively through a JV model, in which it partners primarily with local nephrologists to develop, own and operate dialysis clinics, while the providers of the majority of dialysis services in the United States operate through a combination of subsidiaries and joint ventures. It provides patient care and clinical outcomes to patients suffering from end-stage renal disease (ESRD). Its clinics offer both in center and home dialysis options to meet the needs of patients. Its clinics primarily provide in center hemodialysis treatments and ancillary items and services.

Fresenius Medical Care Corporation Company Profile

Fresenius Medical Care AG & Co. KGaA is a kidney dialysis company. The Company provides dialysis care and related services to persons suffering from end-stage renal disease (ESRD), as well as other healthcare services. The Company’s segments include North America Segment, the Europe, Middle East and Africa (EMEA) Segment, the Asia-Pacific Segment and the Latin America Segment. The Company develops and manufactures a range of dialysis machines, systems and disposable products. As of December 31, 2016, the Company sold its products to customers in more than 120 countries and also used in its internal healthcare service operations. The Company’s Care Coordination services include coordinated delivery of pharmacy services, vascular, cardiovascular and endovascular specialty services, non-dialysis laboratory testing services, physician services, hospitalist and intensivist services, health plan services, ambulatory surgery center services and urgent care services.

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