Critical Contrast: Kindred Healthcare (KND) vs. Universal Health Services (UHS)
Kindred Healthcare (NYSE: KND) and Universal Health Services (NYSE:UHS) are both medical companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.
This table compares Kindred Healthcare and Universal Health Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Universal Health Services||7.10%||15.49%||7.08%|
Kindred Healthcare pays an annual dividend of $0.24 per share and has a dividend yield of 4.0%. Universal Health Services pays an annual dividend of $0.40 per share and has a dividend yield of 0.4%. Kindred Healthcare pays out -1.9% of its earnings in the form of a dividend. Universal Health Services pays out 5.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Kindred Healthcare is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent ratings and price targets for Kindred Healthcare and Universal Health Services, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Universal Health Services||0||8||7||0||2.47|
Kindred Healthcare currently has a consensus target price of $8.50, suggesting a potential upside of 41.67%. Universal Health Services has a consensus target price of $132.92, suggesting a potential upside of 25.93%. Given Kindred Healthcare’s higher probable upside, equities research analysts plainly believe Kindred Healthcare is more favorable than Universal Health Services.
Valuation & Earnings
This table compares Kindred Healthcare and Universal Health Services’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Kindred Healthcare||$7.08 billion||0.07||$470.57 million||($12.82)||-0.47|
|Universal Health Services||$10.11 billion||1.00||$1.71 billion||$7.35||14.36|
Universal Health Services has higher revenue and earnings than Kindred Healthcare. Kindred Healthcare is trading at a lower price-to-earnings ratio than Universal Health Services, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
88.1% of Kindred Healthcare shares are held by institutional investors. Comparatively, 85.1% of Universal Health Services shares are held by institutional investors. 3.0% of Kindred Healthcare shares are held by insiders. Comparatively, 13.2% of Universal Health Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Volatility & Risk
Kindred Healthcare has a beta of 1.22, suggesting that its share price is 22% more volatile than the S&P 500. Comparatively, Universal Health Services has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500.
Universal Health Services beats Kindred Healthcare on 10 of the 15 factors compared between the two stocks.
Kindred Healthcare Company Profile
Kindred Healthcare, Inc., incorporated on March 27, 1998, is a healthcare services company. The Company, through its subsidiaries, operates transitional care (TC) hospitals, a home health, hospice and community care business, inpatient rehabilitation hospitals (IRFs), a contract rehabilitation services business, nursing centers and assisted living facilities across the United States. The Company operates through divisions: the Kindred at Home division, the hospital division, the Kindred Rehabilitation Services division and the nursing center division. These divisions represent six segments: home health services, hospice services, hospitals, Kindred Hospital Rehabilitation Services, RehabCare and nursing centers. The home health services and hospice services operating segments are contained within the Kindred at Home division while the Kindred Hospital Rehabilitation Services and RehabCare operating segments are both contained within the Kindred Rehabilitation Services division.
Universal Health Services Company Profile
Universal Health Services, Inc. is a holding company. The Company’s principal business is owning and operating, through its subsidiaries, acute care hospitals and outpatient facilities, and behavioral healthcare facilities. The Company’s segments include Acute Care Hospital Services, Behavioral Health Services and Other. As of February 28, 2017, the Company owned and/or operated 319 inpatient facilities, and 33 outpatient and other facilities, located in 37 states, Washington, District of Columbia, the United Kingdom, Puerto Rico and the United States Virgin Islands. The Company’s hospitals provide a range of services, such as oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. As of February 28, 2017, its acute care facilities located in the United States included 26 inpatient acute care hospitals; four free-standing emergency departments, and four outpatient surgery/cancer care centers and one surgical hospital.
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