Chemed (NYSE:CHE) & Tenet Healthcare (THC) Critical Survey

Tenet Healthcare (NYSE: THC) and Chemed (NYSE:CHE) are both medical companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, profitability, risk, valuation and earnings.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Tenet Healthcare and Chemed, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tenet Healthcare 2 6 6 0 2.29
Chemed 0 2 1 0 2.33

Tenet Healthcare presently has a consensus price target of $18.31, indicating a potential upside of 12.66%. Chemed has a consensus price target of $228.50, indicating a potential downside of 12.84%. Given Tenet Healthcare’s higher probable upside, equities analysts plainly believe Tenet Healthcare is more favorable than Chemed.

Institutional & Insider Ownership

97.7% of Chemed shares are held by institutional investors. 3.1% of Tenet Healthcare shares are held by company insiders. Comparatively, 4.9% of Chemed shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Tenet Healthcare has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500. Comparatively, Chemed has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500.

Valuation & Earnings

This table compares Tenet Healthcare and Chemed’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tenet Healthcare $19.62 billion 0.08 -$192.00 million ($5.51) -2.95
Chemed $1.58 billion 2.66 $108.74 million $4.50 58.26

Chemed has lower revenue, but higher earnings than Tenet Healthcare. Tenet Healthcare is trading at a lower price-to-earnings ratio than Chemed, indicating that it is currently the more affordable of the two stocks.

Dividends

Chemed pays an annual dividend of $1.12 per share and has a dividend yield of 0.4%. Tenet Healthcare does not pay a dividend. Chemed pays out 24.9% of its earnings in the form of a dividend. Tenet Healthcare has raised its dividend for 9 consecutive years.

Profitability

This table compares Tenet Healthcare and Chemed’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tenet Healthcare -2.85% -5.61% -0.23%
Chemed 4.62% 27.69% 15.16%

Summary

Chemed beats Tenet Healthcare on 11 of the 17 factors compared between the two stocks.

Tenet Healthcare Company Profile

Tenet Healthcare Corporation (Tenet) is a healthcare services company. The Company operates regionally focused, integrated healthcare delivery networks in large urban and suburban markets in the United States. The Company’s segments include Hospital Operations and Other, Ambulatory Care and Conifer. As of December 31, 2016, its subsidiaries operated 79 hospitals, including three academic medical centers, two children’s hospitals, two specialty hospitals and one critical access hospital. The Company’s Ambulatory Care segment includes the operations of its USPI joint venture and its Aspen facilities. As of December 31, 2016, Conifer provided one or more of the business process services described above from 20 service centers to more than 800 Tenet and non-Tenet hospital and other clients in over 40 states. As of December 31, 2016, the Company operated 20 short-stay surgical hospitals, over 470 outpatient centers, and nine facilities in the United Kingdom.

Chemed Company Profile

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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