Surgery Partners (NASDAQ: SGRY) and Healthways (NASDAQ:TVTY) are both small-cap medical companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitabiliy, valuation, dividends, earnings and risk.
Risk and Volatility
Surgery Partners has a beta of 1.86, suggesting that its stock price is 86% more volatile than the S&P 500. Comparatively, Healthways has a beta of 0.4, suggesting that its stock price is 60% less volatile than the S&P 500.
Insider and Institutional Ownership
39.2% of Surgery Partners shares are held by institutional investors. 7.5% of Surgery Partners shares are held by insiders. Comparatively, 8.4% of Healthways shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Profitability
This table compares Surgery Partners and Healthways’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Surgery Partners | 1.19% | 8.88% | 1.25% |
| Healthways | -18.90% | 37.59% | 11.18% |
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Surgery Partners and Healthways, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Surgery Partners | 0 | 1 | 3 | 0 | 2.75 |
| Healthways | 0 | 1 | 7 | 0 | 2.88 |
Surgery Partners presently has a consensus target price of $21.50, suggesting a potential upside of 0.70%. Healthways has a consensus target price of $32.19, suggesting a potential downside of 19.03%. Given Surgery Partners’ higher probable upside, equities research analysts plainly believe Surgery Partners is more favorable than Healthways.
Valuation & Earnings
This table compares Surgery Partners and Healthways’ revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Surgery Partners | $1.14 billion | 0.91 | $245.68 million | $0.28 | 76.25 |
| Healthways | $515.96 million | 3.02 | $109.39 million | ($2.72) | -14.61 |
Surgery Partners has higher revenue and earnings than Healthways. Healthways is trading at a lower price-to-earnings ratio than Surgery Partners, indicating that it is currently the more affordable of the two stocks.
Summary
Surgery Partners beats Healthways on 8 of the 14 factors compared between the two stocks.
Surgery Partners Company Profile
Surgery Partners, Inc. is a healthcare services company. The Company operates in three lines of business across the United States: Surgical Facility Services, Ancillary Services and Optical Services. The Company’s Surgical Facility Services segment consists of the operation of ambulatory surgery centers (ASCs) and surgical hospitals, which include its anesthesia services. The Company’s surgical facilities primarily provide non-emergency surgical procedures across a range of specialties, which include gastrointestinal (GI), general surgery, ophthalmology, orthopedics and pain management. The Company’s Ancillary Services segment consists of a diagnostic laboratory, a specialty pharmacy and multi-specialty physician practices. The Company’s physician practices include its owned and operated physician practices pursuant to long-term management service agreements. The Company’s Optical Services segment consists of an optical laboratory, an optical products group purchasing organization.
Healthways Company Profile
Tivity Health, Inc., formerly Healthways, Inc., is focused targeted population health for those aged 50 and older. The Company offers three programs: SilverSneakers senior fitness, Prime fitness and WholeHealth Living. The SilverSneakers senior fitness program is offered to members of Medicare Advantage, Medicare Supplement, and Group Retiree plans. The Company also offers Prime fitness, a fitness facility access program, through commercial health plans, employers and insurance exchanges. Its national network of fitness centers delivers both SilverSneakers and Prime fitness. As of December 31, 2016, the Company’s fitness networks encompassed approximately 16,000 participating locations and more than 1,000 alternative locations that provide classes outside of traditional fitness centers. As of December 31, 2016, the Company’s WholeHealth Living network included over 88,000 complementary, alternative, and physical medicine practitioners to serve individuals through health plans.
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