Comparing Waste Connections (NYSE:WCN) & Healthcare Services Group (NASDAQ:HCSG)

Healthcare Services Group (NASDAQ:HCSG) and Waste Connections (NYSE:WCN) are both industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, analyst recommendations and dividends.

Institutional & Insider Ownership

98.0% of Healthcare Services Group shares are held by institutional investors. Comparatively, 86.1% of Waste Connections shares are held by institutional investors. 2.9% of Healthcare Services Group shares are held by company insiders. Comparatively, 0.3% of Waste Connections shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Healthcare Services Group and Waste Connections, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Healthcare Services Group	0	2	6	1	2.89
Waste Connections	0	4	14	2	2.90

Healthcare Services Group currently has a consensus target price of $26.50, suggesting a potential upside of 22.20%. Waste Connections has a consensus target price of $200.89, suggesting a potential upside of 24.88%. Given Waste Connections’ stronger consensus rating and higher probable upside, analysts clearly believe Waste Connections is more favorable than Healthcare Services Group.

Dividends

Healthcare Services Group pays an annual dividend of $0.86 per share and has a dividend yield of 4.0%. Waste Connections pays an annual dividend of $1.40 per share and has a dividend yield of 0.9%. Healthcare Services Group pays out 50.0% of its earnings in the form of a dividend. Waste Connections pays out 33.7% 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. Waste Connections has raised its dividend for 8 consecutive years.

Volatility and Risk

Healthcare Services Group has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500. Comparatively, Waste Connections has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500.

Valuation and Earnings

This table compares Healthcare Services Group and Waste Connections”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Healthcare Services Group	$1.86 billion	0.80	$59.06 million	$1.72	12.61
Waste Connections	$9.47 billion	4.27	$1.08 billion	$4.15	38.76

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

Profitability

This table compares Healthcare Services Group and Waste Connections’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Healthcare Services Group	6.59%	18.97%	11.96%
Waste Connections	10.86%	17.31%	6.62%

Summary

Waste Connections beats Healthcare Services Group on 12 of the 18 factors compared between the two stocks.

About Healthcare Services Group

Healthcare Services Group, Inc. provides management, administrative, and operating services to the housekeeping, laundry, linen, facility maintenance, and dietary service departments of nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. It operates through two segments, Housekeeping and Dietary. The Housekeeping segment engages in the cleaning, disinfecting, and sanitizing of resident rooms and common areas of the customers' facilities, as well as laundering and processing of the bed linens, uniforms, resident personal clothing, and other assorted linen items utilized at the customers' facilities. The Dietary segment provides food purchasing, meal preparation, and professional dietitian services, which include the development of menus that meet the dietary needs of residents; and on-site management and clinical consulting services to facilities. It serves long-term and post-acute care facilities, hospitals, and the healthcare industry through referrals and solicitation of target facilities. The company was incorporated in 1976 and is based in Bensalem, Pennsylvania.

About Waste Connections

Waste Connections, Inc. provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada. It offers collection services to residential, commercial, municipal, industrial, and exploration and production (E&P) customers; landfill disposal services; and recycling services for various recyclable materials, including compost, cardboard, mixed paper, plastic containers, glass bottles, and ferrous and aluminum metals. The company owns and operates transfer stations that receive compact and/or load waste to be transported to landfills or treatment facilities through truck, rail, or barge; and intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest through a network of intermodal facilities. In addition, it provides E&P waste treatment, recovery, and disposal services for waste resulting from oil and natural gas exploration and production activity, such as drilling fluids, drill cuttings, completion fluids, and flowback water; production wastes and produced water during a well's operating life; contaminated soils that require treatment during site reclamation; and substances, which require clean-up after a spill, reserve pit clean-up, or pipeline rupture. Further, the company offers leasing services to its customers. Waste Connections, Inc. was founded in 1997 and is based in Woodbridge, Canada.