American Renal Associates Holdings (NYSE: ARA) and Chemed Corp. (NYSE:CHE) are both medical companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, risk, analyst recommendations, profitabiliy, valuation and earnings.
Earnings and Valuation
This table compares American Renal Associates Holdings and Chemed Corp.’s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| American Renal Associates Holdings | $754.66 million | 0.72 | $151.64 million | ($0.83) | -20.96 |
| Chemed Corp. | $1.62 billion | 1.98 | $226.69 million | $3.99 | 50.12 |
Chemed Corp. has higher revenue and earnings than American Renal Associates Holdings. American Renal Associates Holdings is trading at a lower price-to-earnings ratio than Chemed Corp., indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
88.8% of American Renal Associates Holdings shares are owned by institutional investors. Comparatively, 97.8% of Chemed Corp. shares are owned by institutional investors. 12.6% of American Renal Associates Holdings shares are owned by company insiders. Comparatively, 5.3% of Chemed Corp. shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Profitability
This table compares American Renal Associates Holdings and Chemed Corp.’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American Renal Associates Holdings | -2.13% | 20.97% | 2.91% |
| Chemed Corp. | 4.16% | 26.18% | 14.62% |
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for American Renal Associates Holdings and Chemed Corp., as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Renal Associates Holdings | 1 | 0 | 5 | 0 | 2.67 |
| Chemed Corp. | 0 | 2 | 1 | 0 | 2.33 |
American Renal Associates Holdings presently has a consensus target price of $27.33, indicating a potential upside of 57.09%. Chemed Corp. has a consensus target price of $214.00, indicating a potential upside of 7.01%. Given American Renal Associates Holdings’ stronger consensus rating and higher possible upside, analysts plainly believe American Renal Associates Holdings is more favorable than Chemed Corp..
Dividends
Chemed Corp. pays an annual dividend of $1.04 per share and has a dividend yield of 0.5%. American Renal Associates Holdings does not pay a dividend. Chemed Corp. pays out 26.1% of its earnings in the form of a dividend. American Renal Associates Holdings has increased its dividend for 8 consecutive years.
Volatility & Risk
American Renal Associates Holdings has a beta of 3.85, indicating that its share price is 285% more volatile than the S&P 500. Comparatively, Chemed Corp. has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500.
Summary
Chemed Corp. beats American Renal Associates Holdings on 9 of the 16 factors compared between the two stocks.
About American Renal Associates Holdings
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.
About Chemed Corp.
Chemed Corporation purchases, operates and divests subsidiaries engaged in various business activities. The Company operates through two segments: the VITAS segment (VITAS) and the Roto-Rooter segment (Roto-Rooter). The Company’s VITAS provides hospice and palliative care services to its patients through a network of physicians, registered nurses, home health aides, social workers, clergy and volunteers. VITAS is the provider of hospice services in an industry dominated primarily by small, non-profit, community-based hospices. VITAS provides hospice care to Medicare beneficiaries participating in these managed care programs. A portion of its VITAS business is operated in the state of Florida. The Roto-Rooter segment provides plumbing, drain cleaning, water restoration and other related services to both residential and commercial customers.
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