Acadia Healthcare (NASDAQ: ACHC) and HealthStream (NASDAQ:HSTM) are both medical companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, analyst recommendations, valuation, profitability, earnings and dividends.

Valuation and Earnings

This table compares Acadia Healthcare and HealthStream’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Acadia Healthcare $2.85 billion 1.07 $6.14 million $1.97 17.57
HealthStream $225.97 million 3.29 $3.75 million $0.18 129.45

Acadia Healthcare has higher revenue and earnings than HealthStream. Acadia Healthcare is trading at a lower price-to-earnings ratio than HealthStream, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings for Acadia Healthcare and HealthStream, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acadia Healthcare 0 6 8 0 2.57
HealthStream 0 4 2 0 2.33

Acadia Healthcare currently has a consensus price target of $42.58, indicating a potential upside of 23.04%. HealthStream has a consensus price target of $24.40, indicating a potential upside of 4.72%. Given Acadia Healthcare’s stronger consensus rating and higher probable upside, equities analysts clearly believe Acadia Healthcare is more favorable than HealthStream.

Profitability

This table compares Acadia Healthcare and HealthStream’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Acadia Healthcare 6.07% 8.57% 3.22%
HealthStream 2.36% 2.46% 1.79%

Risk & Volatility

Acadia Healthcare has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500. Comparatively, HealthStream has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.

Institutional & Insider Ownership

75.3% of HealthStream shares are owned by institutional investors. 11.1% of Acadia Healthcare shares are owned by insiders. Comparatively, 21.1% of HealthStream shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Acadia Healthcare beats HealthStream on 9 of the 14 factors compared between the two stocks.

Acadia Healthcare Company Profile

Acadia Healthcare Company, Inc. is a provider of behavioral healthcare services, with operations in the United States and the United Kingdom. The Company focuses on acquiring and developing behavioral healthcare facilities. The Company operates through two segments: U.S. Facilities and U.K. Facilities. The Company is engaged in operating acute inpatient psychiatric facilities, specialty treatment facilities, residential treatment centers and facilities providing outpatient behavioral healthcare services. As of December 31, 2016, the U.S. Facilities segment included 208 behavioral healthcare facilities with approximately 8,500 beds in 39 states and Puerto Rico, and the U.K. Facilities segment included 365 behavioral healthcare facilities with approximately 8,600 beds in the United Kingdom. As of December 31, 2016, the Company had operated 573 behavioral healthcare facilities with approximately 17,100 beds in 39 states, the United Kingdom and Puerto Rico.

HealthStream Company Profile

HealthStream, Inc. (HealthStream) provides workforce, patient experience and provider solutions for healthcare organizations. The Company operates in three segments: HealthStream Workforce Solutions, HealthStream Patient Experience Solutions and HealthStream Provider Solutions. HealthStream’s products and services are organized into three segments: Workforce Solutions, Patient Experience Solutions, and Provider Solutions. HealthStream’s solutions are provided to a range of customers within the healthcare industry across the continuum of care. Delivered primarily as Software-as-a-Service (SaaS), the Company’s solutions focus on challenges facing the healthcare workforce and healthcare organizations, including the need to manage, retain, engage and develop healthcare workforce talent; meet compliance requirements; manage ongoing medical staff credentialing and privileging processes, and deliver patient experiences of care in healthcare organizations.

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