Head to Head Contrast: American Renal Associates (ARA) & Quest Diagnostics (DGX)
American Renal Associates (NYSE: ARA) and Quest Diagnostics (NYSE:DGX) are both medical companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, earnings and profitability.
Institutional & Insider Ownership
93.5% of American Renal Associates shares are owned by institutional investors. Comparatively, 89.2% of Quest Diagnostics shares are owned by institutional investors. 12.6% of American Renal Associates shares are owned by insiders. Comparatively, 1.8% of Quest Diagnostics shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This is a summary of recent ratings for American Renal Associates and Quest Diagnostics, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Renal Associates||0||0||4||0||3.00|
American Renal Associates presently has a consensus target price of $20.00, suggesting a potential upside of 9.89%. Quest Diagnostics has a consensus target price of $106.11, suggesting a potential upside of 5.50%. Given American Renal Associates’ stronger consensus rating and higher probable upside, research analysts plainly believe American Renal Associates is more favorable than Quest Diagnostics.
Volatility and Risk
American Renal Associates has a beta of 3.55, meaning that its stock price is 255% more volatile than the S&P 500. Comparatively, Quest Diagnostics has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500.
Quest Diagnostics pays an annual dividend of $1.80 per share and has a dividend yield of 1.8%. American Renal Associates does not pay a dividend. Quest Diagnostics pays out 32.7% of its earnings in the form of a dividend. American Renal Associates has increased its dividend for 6 consecutive years.
Valuation and Earnings
This table compares American Renal Associates and Quest Diagnostics’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American Renal Associates||$749.77 million||0.76||-$380,000.00||($0.33)||-55.15|
|Quest Diagnostics||$7.71 billion||1.78||$772.00 million||$5.50||18.29|
Quest Diagnostics has higher revenue and earnings than American Renal Associates. American Renal Associates is trading at a lower price-to-earnings ratio than Quest Diagnostics, indicating that it is currently the more affordable of the two stocks.
This table compares American Renal Associates and Quest Diagnostics’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Renal Associates||-2.15%||15.80%||2.34%|
Quest Diagnostics beats American Renal Associates on 9 of the 17 factors compared between the two stocks.
American Renal Associates 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.
Quest Diagnostics Company Profile
Quest Diagnostics Incorporated is a provider of diagnostic information services. The Company operates through two businesses: Diagnostic Information Services and Diagnostic Solutions. The Diagnostic Information Services business develops and delivers diagnostic testing information and services, providing insights that empower and enable a range of customers, including patients, clinicians, hospitals, integrated delivery networks (IDNs), health plans, employers and accountable care organizations (ACOs). Its Diagnostic Solutions group includes its risk assessment services business, which offers solutions for insurers, and its healthcare information technology businesses, which offers solutions for healthcare providers. The Company’s services are provided under the Quest Diagnostics brand, but it also provides services under other brands, including AmeriPath, Dermpath Diagnostics, Focus Diagnostics, Athena Diagnostics, ExamOne, Quanum and Care360.
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