Critical Analysis: CVS Health (NYSE:CVS) vs. Pacific Health Care Organization (OTCMKTS:PFHO)

Pacific Health Care Organization (OTCMKTS:PFHO) and CVS Health (NYSE:CVS) are both medical companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Risk and Volatility

Pacific Health Care Organization has a beta of 0.1, suggesting that its stock price is 90% less volatile than the S&P 500. Comparatively, CVS Health has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.

Institutional & Insider Ownership

80.7% of CVS Health shares are held by institutional investors. 61.6% of Pacific Health Care Organization shares are held by insiders. Comparatively, 1.2% of CVS Health shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for Pacific Health Care Organization and CVS Health, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pacific Health Care Organization	0	0	0	0	0.00
CVS Health	0	3	20	0	2.87

CVS Health has a consensus target price of $95.05, suggesting a potential upside of 30.57%. Given CVS Health’s stronger consensus rating and higher probable upside, analysts clearly believe CVS Health is more favorable than Pacific Health Care Organization.

Valuation & Earnings

This table compares Pacific Health Care Organization and CVS Health”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pacific Health Care Organization	$6.72 million	2.29	$1.39 million	$0.11	10.91
CVS Health	$402.07 billion	0.23	$1.77 billion	$1.38	52.75

CVS Health has higher revenue and earnings than Pacific Health Care Organization. Pacific Health Care Organization is trading at a lower price-to-earnings ratio than CVS Health, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Pacific Health Care Organization and CVS Health’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pacific Health Care Organization	20.67%	10.99%	10.53%
CVS Health	0.44%	11.31%	3.35%

Summary

CVS Health beats Pacific Health Care Organization on 10 of the 14 factors compared between the two stocks.

About Pacific Health Care Organization

Pacific Health Care Organization, Inc., together with its subsidiaries, operates as a specialty workers' compensation cost containment company in the United States. It is involved in managing and administering health care organizations (HCOs) and medical provider networks (MPNs). The company also provides claims-related services, including utilization review, medical case management, medical bill review, employee advocate services, workers' compensation carve-outs, expert witness testimony, and Medicare set-aside services. It serves insurers, third party administrators, self-administered employers, municipalities, and other industries. The company was formerly known as Clear Air, Inc. and changed its name to Pacific Health Care Organization, Inc. in January 2001. Pacific Health Care Organization, Inc. was incorporated in 1970 and is based in Irvine, California.

About CVS Health

CVS Health Corporation provides health solutions in the United States. It operates through Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness segments. The Health Care Benefits segment offers traditional, voluntary, and consumer-directed health insurance products and related services. It serves employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups, and expatriates. The Health Services segment offers pharmacy benefit management solutions, including plan design and administration, formulary management, retail pharmacy network management, specialty and mail order pharmacy, clinical, disease management, and medical spend management services. It serves employers, insurance companies, unions, government employee groups, health plans, prescription drug plans, Medicaid managed care plans, CMS, plans offered on public health insurance, and other sponsors of health benefit plans. The Pharmacy & Consumer Wellness segment sells prescription and over-the-counter drugs, consumer health and beauty products, and personal care products. This segment also distributes prescription drugs; and provides related pharmacy consulting and other ancillary services to care facilities and other care settings. It operates online retail pharmacy websites, LTC pharmacies and on-site pharmacies, retail specialty pharmacy stores, compounding pharmacies and branches for infusion and enteral nutrition services. The company was formerly known as CVS Caremark Corporation and changed its name to CVS Health Corporation in September 2014. CVS Health Corporation was incorporated in 1996 and is headquartered in Woonsocket, Rhode Island.