HMS Holdings Corp (HMSY) and Laboratory Corporation of America Holdings (LH) Critical Review

HMS Holdings Corp (NASDAQ: HMSY) and Laboratory Corporation of America Holdings (NYSE:LH) are both medical companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, profitability, institutional ownership, valuation and earnings.

Risk and Volatility

HMS Holdings Corp has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500. Comparatively, Laboratory Corporation of America Holdings has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.

Earnings and Valuation

This table compares HMS Holdings Corp and Laboratory Corporation of America Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
HMS Holdings Corp $496.01 million 2.64 $37.63 million $0.29 53.69
Laboratory Corporation of America Holdings $9.64 billion 1.62 $732.10 million $7.15 21.50

Laboratory Corporation of America Holdings has higher revenue and earnings than HMS Holdings Corp. Laboratory Corporation of America Holdings is trading at a lower price-to-earnings ratio than HMS Holdings Corp, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

93.1% of HMS Holdings Corp shares are held by institutional investors. Comparatively, 93.4% of Laboratory Corporation of America Holdings shares are held by institutional investors. 3.2% of HMS Holdings Corp shares are held by company insiders. Comparatively, 0.9% of Laboratory Corporation of America Holdings shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares HMS Holdings Corp and Laboratory Corporation of America Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HMS Holdings Corp 6.37% 9.26% 5.81%
Laboratory Corporation of America Holdings 7.40% 16.75% 6.43%

Analyst Ratings

This is a summary of recent ratings for HMS Holdings Corp and Laboratory Corporation of America Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HMS Holdings Corp 0 2 5 1 2.88
Laboratory Corporation of America Holdings 0 5 7 0 2.58

HMS Holdings Corp currently has a consensus target price of $23.06, indicating a potential upside of 48.12%. Laboratory Corporation of America Holdings has a consensus target price of $168.91, indicating a potential upside of 9.87%. Given HMS Holdings Corp’s stronger consensus rating and higher probable upside, research analysts plainly believe HMS Holdings Corp is more favorable than Laboratory Corporation of America Holdings.

Summary

Laboratory Corporation of America Holdings beats HMS Holdings Corp on 8 of the 15 factors compared between the two stocks.

About HMS Holdings Corp

HMS Holdings Corp. is a holding company. The Company, through its subsidiaries, operates in the United States healthcare insurance benefit cost containment marketplace. It provides coordination of benefits services to government, and private healthcare payers and sponsors. Its payment integrity services ensure that healthcare claims billed are accurate and appropriate. It offers services to state Medicaid agencies, government health agencies and health plans, including Medicaid managed care, Medicare Advantage and group and individual health lines of business; government and private employers; and other healthcare payers and sponsors, including child support agencies. It serves approximately 45 state Medicaid programs and the District of Columbia, and government health agencies, including Centers for Medicare & Medicaid Services (CMS) and the Veterans Health Administration (VHA). It also provides services to approximately 250 health plans and supports their multiple lines of business.

About Laboratory Corporation of America Holdings

Laboratory Corporation of America Holdings is a life sciences company that is integrated in guiding patient care, providing clinical laboratory and end-to-end drug development services. The Company operates as a healthcare diagnostics company. The Company operates through two segments: LabCorp Diagnostics (LCD) and Covance Drug Development (CDD). The LCD segment is an independent clinical laboratory business, which offers menu of frequently requested and specialty testing through an integrated network of primary and specialty laboratories across the United States. The CDD segment offers drug development services, and provides a range of drug research and development (R&D) and market access services to biopharmaceutical companies and medical device companies across the world. It serves a range of customers, including managed care organizations (MCOs), biopharmaceutical companies, governmental agencies, physicians and other healthcare providers.

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