Reviewing Davita (DVA) and Chemed (CHE)

Davita (NYSE: DVA) and Chemed (NYSE:CHE) are both mid-cap healthcare companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Analyst Ratings

This is a summary of current ratings for Davita and Chemed, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Davita 1 4 4 2 2.64
Chemed 0 2 1 0 2.33

Davita currently has a consensus price target of $76.00, indicating a potential downside of 0.94%. Chemed has a consensus price target of $228.50, indicating a potential downside of 10.93%. Given Davita’s stronger consensus rating and higher probable upside, research analysts plainly believe Davita is more favorable than Chemed.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Davita $14.75 billion 0.95 $879.87 million $2.61 29.39
Chemed $1.58 billion 2.60 $108.74 million $4.49 57.14

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

Institutional & Insider Ownership

87.9% of Davita shares are held by institutional investors. Comparatively, 97.7% of Chemed shares are held by institutional investors. 2.0% of Davita shares are held by insiders. Comparatively, 4.9% of Chemed shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

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

Profitability

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

Net Margins Return on Equity Return on Assets
Davita 3.40% 13.31% 3.55%
Chemed 4.62% 27.69% 15.16%

Risk & Volatility

Davita has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500. Comparatively, Chemed has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500.

Summary

Chemed beats Davita on 11 of the 18 factors compared between the two stocks.

Davita Company Profile

DaVita Inc., formerly DaVita HealthCare Partners Inc., operates two divisions: DaVita Kidney Care (Kidney Care) and DaVita Medical Group (DMG). The Kidney Care division consists of its the United States dialysis and related lab services, its ancillary services and strategic initiatives, including its international operations, and its corporate administrative support. Its DMG division is a patient- and physician-focused integrated healthcare delivery and management company that provides medical services to members through capitation contracts. Its segments include U.S. dialysis and related lab services, DMG, and Other-Ancillary services and strategic initiatives. Its U.S. dialysis and related lab services line of business provide kidney dialysis services in the United States for patients suffering from chronic kidney failure, also known as end stage renal disease (ESRD). As of December 31, 2016, it had operated or provided administrative services to 154 outpatient dialysis centers.

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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