Cardinal Health (NYSE: CAH) and CVS Health Corporation (NYSE:CVS) are both large-cap medical companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, profitabiliy, risk, earnings, valuation and institutional ownership.
Risk & Volatility
Cardinal Health has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500. Comparatively, CVS Health Corporation has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.
Institutional and Insider Ownership
87.1% of Cardinal Health shares are owned by institutional investors. Comparatively, 81.9% of CVS Health Corporation shares are owned by institutional investors. 0.9% of Cardinal Health shares are owned by insiders. Comparatively, 0.6% of CVS Health Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of recent ratings and recommmendations for Cardinal Health and CVS Health Corporation, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Cardinal Health | 0 | 12 | 3 | 0 | 2.20 |
| CVS Health Corporation | 0 | 6 | 11 | 0 | 2.65 |
Cardinal Health presently has a consensus price target of $81.09, indicating a potential upside of 20.47%. CVS Health Corporation has a consensus price target of $91.64, indicating a potential upside of 15.80%. Given Cardinal Health’s higher probable upside, research analysts plainly believe Cardinal Health is more favorable than CVS Health Corporation.
Earnings and Valuation
This table compares Cardinal Health and CVS Health Corporation’s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Cardinal Health | $129.98 billion | 0.16 | $2.96 billion | $4.04 | 16.66 |
| CVS Health Corporation | $180.79 billion | 0.45 | $12.32 billion | $5.01 | 15.80 |
CVS Health Corporation has higher revenue and earnings than Cardinal Health. CVS Health Corporation is trading at a lower price-to-earnings ratio than Cardinal Health, indicating that it is currently the more affordable of the two stocks.
Dividends
Cardinal Health pays an annual dividend of $1.85 per share and has a dividend yield of 2.7%. CVS Health Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.5%. Cardinal Health pays out 45.8% of its earnings in the form of a dividend. CVS Health Corporation pays out 39.9% 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. Cardinal Health has raised its dividend for 12 consecutive years and CVS Health Corporation has raised its dividend for 9 consecutive years. Cardinal Health is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Cardinal Health and CVS Health Corporation’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Cardinal Health | 0.99% | 26.20% | 4.81% |
| CVS Health Corporation | 2.93% | 17.47% | 6.58% |
Summary
CVS Health Corporation beats Cardinal Health on 11 of the 17 factors compared between the two stocks.
About Cardinal Health
Cardinal Health, Inc. is a healthcare services and products company. The Company operates through two segments: Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare and consumer products. This segment also operates nuclear pharmacies and cyclotron facilities; provides pharmacy management services to hospitals, as well as medication therapy management and patient outcomes services to hospitals, other healthcare providers and payers, and provides services to healthcare companies. The Medical segment distributes a range of medical, surgical and laboratory products, and provides services to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers. This segment also manufactures, sources and develops its own Cardinal Health brand medical and surgical products. It provides post-acute care management and transition services, and software to hospitals.
About CVS Health Corporation
CVS Health Corporation, together with its subsidiaries, is an integrated pharmacy healthcare company. The Company provides pharmacy care for the senior community through Omnicare, Inc. (Omnicare) and Omnicare’s long-term care (LTC) operations, which include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. It operates through three segments: Pharmacy Services, Retail/LTC and Corporate. The Pharmacy Services Segment provides a range of pharmacy benefit management (PBM) solutions to its clients. As of December 31, 2016, the Retail/LTC Segment included 9,709 retail locations (of which 7,980 were its stores that operated a pharmacy and 1,674 were its pharmacies located within Target Corporation (Target) stores), its online retail pharmacy Websites, CVS.com, Navarro.com and Onofre.com.br, 38 onsite pharmacy stores, its long-term care pharmacy operations and its retail healthcare clinics.
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