Head to Head Analysis: Psychemedics (PMD) versus Quest Diagnostics (DGX)

Psychemedics (NASDAQ:PMD) and Quest Diagnostics (NYSE:DGX) are both medical companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.

Dividends

Psychemedics pays an annual dividend of $0.72 per share and has a dividend yield of 5.2%. Quest Diagnostics pays an annual dividend of $2.12 per share and has a dividend yield of 2.3%. Quest Diagnostics pays out 33.6% of its earnings in the form of a dividend. Quest Diagnostics has raised its dividend for 7 consecutive years.

Valuation and Earnings

This table compares Psychemedics and Quest Diagnostics’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Psychemedics $42.67 million 1.78 $4.58 million N/A N/A
Quest Diagnostics $7.53 billion 1.62 $736.00 million $6.31 14.42

Quest Diagnostics has higher revenue and earnings than Psychemedics.

Profitability

This table compares Psychemedics and Quest Diagnostics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Psychemedics 10.74% 24.55% 17.28%
Quest Diagnostics 9.77% 15.23% 7.35%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Psychemedics and Quest Diagnostics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Psychemedics 0 0 0 0 N/A
Quest Diagnostics 2 9 9 0 2.35

Quest Diagnostics has a consensus target price of $101.76, indicating a potential upside of 11.80%. Given Quest Diagnostics’ higher probable upside, analysts clearly believe Quest Diagnostics is more favorable than Psychemedics.

Insider and Institutional Ownership

56.6% of Psychemedics shares are held by institutional investors. Comparatively, 90.5% of Quest Diagnostics shares are held by institutional investors. 11.2% of Psychemedics shares are held by company insiders. Comparatively, 1.8% of Quest Diagnostics shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Psychemedics has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Quest Diagnostics has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.

Summary

Psychemedics beats Quest Diagnostics on 8 of the 15 factors compared between the two stocks.

Psychemedics Company Profile

Psychemedics Corporation provides testing services for the detection of drugs of abuse through the analysis of hair samples in the United States and internationally. The company's tests provide quantitative information that can indicate the approximate amount of drug ingested, as well as historical data, which can show a pattern of individual drug use over a longer period of time. It provides screening and confirmation by mass spectrometry using industry-accepted practices for cocaine, marijuana, PCP, amphetamines, synthetic cannabinoids, and benzodiazepines, as well as opiates, including heroin, hydrocodone, hydromorphone, oxycodone, oxymorphone, and codeine. The company offers its services to employers for applicant and employee testing; treatment professionals, law enforcement agencies, school administrators, and parents concerned about their children's drug use; and Fortune 500 companies and small to mid-size corporations, as well as school and government entities. Psychemedics Corporation was founded in 1985 and is headquartered in Acton, Massachusetts.

Quest Diagnostics Company Profile

Quest Diagnostics Incorporated provides diagnostic testing information and services in the United States and internationally. The company's Diagnostic Information Services business segment develops and delivers diagnostic testing information and services, such as routine testing, non-routine and advanced clinical testing, gene-based and esoteric testing, anatomic pathology, and other diagnostic information services. This segment offers diagnostic information services primarily under the Quest Diagnostics brand, as well as under the AmeriPath, Dermpath Diagnostics, Athena Diagnostics, ExamOne, and Quanum brands to patients, clinicians, hospitals, integrated delivery networks, health plans, employers, and accountable care organizations through a network of laboratories, patient service centers, phlebotomists in physician offices, call centers and mobile paramedics, nurses, and other health and wellness professionals. Its Diagnostic Solutions segment offers risk assessment services for the life insurance industry; and health information technology solutions for healthcare organizations and clinicians. Quest Diagnostics Incorporated was founded in 1967 and is headquartered in Secaucus, New Jersey.

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