HMS (NASDAQ:HMSY) and Conduent (NYSE:CNDT) are both medical companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, risk, valuation, earnings, profitability and institutional ownership.

Volatility and Risk

HMS has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500. Comparatively, Conduent has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500.

Profitability

This table compares HMS and Conduent’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HMS 11.28% 14.02% 9.19%
Conduent -13.14% 6.61% 3.13%

Insider and Institutional Ownership

93.4% of HMS shares are held by institutional investors. Comparatively, 87.9% of Conduent shares are held by institutional investors. 2.9% of HMS shares are held by insiders. Comparatively, 0.4% of Conduent shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares HMS and Conduent’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HMS $598.29 million 4.60 $54.99 million $0.84 37.58
Conduent $5.39 billion 0.37 -$416.00 million $1.05 9.14

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

Analyst Recommendations

This is a breakdown of current ratings for HMS and Conduent, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HMS 0 3 8 0 2.73
Conduent 0 5 2 0 2.29

HMS presently has a consensus target price of $32.93, indicating a potential upside of 4.32%. Conduent has a consensus target price of $14.42, indicating a potential upside of 50.17%. Given Conduent’s higher possible upside, analysts plainly believe Conduent is more favorable than HMS.

Summary

HMS beats Conduent on 11 of the 14 factors compared between the two stocks.

About HMS

HMS Holdings Corp., through its subsidiaries, provides cost containment solutions in the United States healthcare marketplace. The company offers coordination of benefits services to government and commercial healthcare payers to ensure that the correct party pays the claim; and population management solutions that provide risk-bearing organizations with intelligence across their member populations to identify risks, and enhance patient engagement and outcomes, as well as payment integrity, care management and consumer engagement, and analytical solutions. It serves state Medicaid programs, commercial health plans, federal government health agencies, government and private employers, children's health insurance program, and other healthcare payers, as well as a subcontractor. The company was founded in 1974 and is headquartered in Irving, Texas.

About Conduent

Conduent Incorporated provides business process services with capabilities in transaction-intensive processing, analytics, and automation in the United States and Europe. It operates through three segments: Commercial Industries, Government Services, and Transportation. The Commercial Industries segment offers business process services and customized solutions to clients in various industries. This segment delivers end-to-end business-to-business and business-to-customer services, including customer care, human resource management, omni-channel communications, and finance and accounting services that enable its clients to optimize their processes. It also provides industry-specific services, such as personalized product information for the automotive industry; digitized source-to-pay solutions for clients in the manufacturing industry; customer experience and marketing services for clients in the retail industry; mortgage and consumer loan processing for clients in the financial services industry; and customized workforce learning solutions for clients in the aerospace industry. The Government Services segment provides government-centric business process services to the United States federal, state, local, and foreign governments for transportation, public assistance, program administration, transaction processing, and payment services. The Transportation segment provides support for electronic toll collection, public transit, parking, and photo enforcement service to transportation departments and agencies worldwide. It also offers payment services comprising prepaid cards, health savings accounts, and child support payments; customer care services; human resources services; finance and accounting services; legal business services; workforce learning services; and applied automation and analytics solutions. The company is headquartered in Florham Park, New Jersey.

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