Critical Review: NutriSystem (NTRI) versus The Providence Service Corporation (PRSC)

The Providence Service Corporation (NASDAQ: PRSC) and NutriSystem (NASDAQ:NTRI) are both small-cap consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitability, institutional ownership, dividends and analyst recommendations.

Earnings and Valuation

This table compares The Providence Service Corporation and NutriSystem’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Providence Service Corporation $1.60 billion 0.42 $71.84 million $4.65 10.65
NutriSystem $641.09 million 2.50 $86.26 million $1.61 33.51

NutriSystem has higher revenue, but lower earnings than The Providence Service Corporation. The Providence Service Corporation is trading at a lower price-to-earnings ratio than NutriSystem, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

92.9% of The Providence Service Corporation shares are owned by institutional investors. Comparatively, 94.8% of NutriSystem shares are owned by institutional investors. 18.9% of The Providence Service Corporation shares are owned by insiders. Comparatively, 2.4% of NutriSystem shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

NutriSystem pays an annual dividend of $0.70 per share and has a dividend yield of 1.3%. The Providence Service Corporation does not pay a dividend. NutriSystem pays out 43.5% of its earnings in the form of a dividend.

Profitability

This table compares The Providence Service Corporation and NutriSystem’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Providence Service Corporation 4.11% 6.94% 2.46%
NutriSystem 7.60% 48.41% 29.18%

Analyst Ratings

This is a summary of current ratings for The Providence Service Corporation and NutriSystem, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Providence Service Corporation 0 1 1 0 2.50
NutriSystem 0 2 7 0 2.78

The Providence Service Corporation currently has a consensus price target of $60.00, indicating a potential upside of 21.19%. NutriSystem has a consensus price target of $65.00, indicating a potential upside of 20.48%. Given The Providence Service Corporation’s higher probable upside, research analysts plainly believe The Providence Service Corporation is more favorable than NutriSystem.

Volatility & Risk

The Providence Service Corporation has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500. Comparatively, NutriSystem has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Summary

NutriSystem beats The Providence Service Corporation on 11 of the 16 factors compared between the two stocks.

About The Providence Service Corporation

The Providence Service Corporation (Providence) is a holding company. The Company, through its subsidiaries, is engaged in the provision of healthcare and workforce development services for public and private sector entities. The Company’s segments include Non-Emergency Transportation Services (NET Services), Workforce Development Services (WD Services) and Matrix Investment. NET Services segment includes nationwide provider of non-emergency medical transportation programs for state governments and managed care organizations. WD Services segment is a global provider of employment preparation and placement and legal offender rehabilitation services to eligible participants of government sponsored programs. Matrix Investment segment includes minority interest in nationwide provider of in-home care optimization and management solutions, including comprehensive health assessments (CHAs), to members of managed care organizations, accounted for as an equity method investment.

About NutriSystem

Nutrisystem, Inc. is a provider of weight management products and services, including nutritionally balanced weight loss programs, multi-day kits available at retail locations and digital tools to support weight loss. The Company’s program customers purchase monthly food packages containing four-week meal plan consisting supply of breakfasts, lunches, dinners and snacks and flex meal plan recipes, which they supplement with fresh fruits, vegetables and dairy. Its customers order on an auto-delivery basis (Auto-Delivery), where means it sends a four-week meal plan on an ongoing basis until notified of a customer’s cancellation. The Company offers its pre-selected favorites food pack or personalized plans, where customers can hand pick their entire menu or customize plans to their dietary preference. As of December 31, 2016, its meal plans featured over 150 menu options at different price points, including frozen and ready-to-go entrees, desserts, snacks and shakes.

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