Critical Survey: Five Star Senior Living (FVE) and Civitas Solutions (CIVI)

Five Star Senior Living (NASDAQ: FVE) and Civitas Solutions (NYSE:CIVI) are both small-cap medical companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.

Profitability

This table compares Five Star Senior Living and Civitas Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Five Star Senior Living -1.83% -18.10% -5.59%
Civitas Solutions 0.43% 16.25% 2.49%

Institutional & Insider Ownership

21.3% of Five Star Senior Living shares are owned by institutional investors. Comparatively, 94.2% of Civitas Solutions shares are owned by institutional investors. 39.8% of Five Star Senior Living shares are owned by company insiders. Comparatively, 5.3% of Civitas Solutions shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Five Star Senior Living has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500. Comparatively, Civitas Solutions has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500.

Valuation and Earnings

This table compares Five Star Senior Living and Civitas Solutions’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Five Star Senior Living $1.38 billion 0.05 -$21.81 million ($0.51) -2.94
Civitas Solutions $1.47 billion 0.46 $6.33 million $0.17 105.59

Civitas Solutions has higher revenue and earnings than Five Star Senior Living. Five Star Senior Living is trading at a lower price-to-earnings ratio than Civitas Solutions, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations and price targets for Five Star Senior Living and Civitas Solutions, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Five Star Senior Living 0 0 2 0 3.00
Civitas Solutions 0 0 2 0 3.00

Five Star Senior Living presently has a consensus price target of $3.88, suggesting a potential upside of 158.33%. Civitas Solutions has a consensus price target of $25.50, suggesting a potential upside of 42.06%. Given Five Star Senior Living’s higher possible upside, analysts clearly believe Five Star Senior Living is more favorable than Civitas Solutions.

Summary

Civitas Solutions beats Five Star Senior Living on 8 of the 11 factors compared between the two stocks.

Five Star Senior Living Company Profile

Five Star Senior Living Inc., formerly Five Star Quality Care, Inc., operates senior living communities, including independent living communities, assisted living communities and skilled nursing facilities (SNFs). The Company’s segments include senior living communities and rehabilitation and wellness. In the senior living communities segment, the Company operates for its own account or manage for the account of others independent living communities, assisted living communities and SNFs that are subject to centralized oversight and provide housing and services to elderly residents. In the rehabilitation and wellness segment, the Company provides services in the inpatient setting and in outpatient clinics. As of December 31, 2016, the Company operated 283 senior living communities located in 32 states with 31,830 living units, including 253 primarily independent and assisted living communities with 29,229 living units and 30 SNFs with 2,601 living units.

Civitas Solutions Company Profile

Civitas Solutions, Inc. is a provider of home- and community-based health and human services to individuals with intellectual, developmental, physical or behavioral disabilities and other special needs. The Company operates through two segments: Human Services and Post-Acute Specialty Rehabilitation Services (SRS). The Human Services segment provides home- and community-based human services to individuals with intellectual and/or developmental disabilities (I/DD), youth with emotional, behavioral and/or medically complex challenges or at-risk youth (ARY), and elders. The SRS segment delivers healthcare and community-based health and human services to individuals having suffered acquired brain injury, spinal injuries, and other catastrophic injuries and illnesses. Within its SRS segment, its NeuroRestorative business unit is focused on rehabilitation and transitional living services, and its CareMeridian business unit is focused on the medically-intensive post-acute care services.

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