Critical Contrast: Healthcare Services Group (NASDAQ:HCSG) & ABM Industries (ABM)
Healthcare Services Group (NASDAQ: HCSG) and ABM Industries (NYSE:ABM) are both mid-cap business services companies, but which is the better business? We will compare the two companies based on the strength of their profitabiliy, risk, institutional ownership, earnings, valuation, dividends and analyst recommendations.
This table compares Healthcare Services Group and ABM Industries’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Healthcare Services Group||5.07%||24.12%||15.06%|
Earnings & Valuation
This table compares Healthcare Services Group and ABM Industries’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Healthcare Services Group||$1.67 billion||2.25||$129.75 million||$1.15||44.70|
|ABM Industries||$5.26 billion||0.47||$184.60 million||$0.24||186.50|
ABM Industries has higher revenue and earnings than Healthcare Services Group. Healthcare Services Group is trading at a lower price-to-earnings ratio than ABM Industries, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
93.8% of Healthcare Services Group shares are owned by institutional investors. Comparatively, 93.3% of ABM Industries shares are owned by institutional investors. 4.3% of Healthcare Services Group shares are owned by insiders. Comparatively, 1.3% of ABM Industries shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Healthcare Services Group pays an annual dividend of $0.75 per share and has a dividend yield of 1.5%. ABM Industries pays an annual dividend of $0.68 per share and has a dividend yield of 1.5%. Healthcare Services Group pays out 65.2% of its earnings in the form of a dividend. ABM Industries pays out 283.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Healthcare Services Group has increased its dividend for 9 consecutive years and ABM Industries has increased its dividend for 49 consecutive years. ABM Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of recent ratings and target prices for Healthcare Services Group and ABM Industries, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Healthcare Services Group||0||2||3||0||2.60|
Healthcare Services Group currently has a consensus price target of $51.75, indicating a potential upside of 0.66%. ABM Industries has a consensus price target of $48.33, indicating a potential upside of 7.98%. Given ABM Industries’ stronger consensus rating and higher probable upside, analysts plainly believe ABM Industries is more favorable than Healthcare Services Group.
Risk & Volatility
Healthcare Services Group has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, ABM Industries has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500.
Healthcare Services Group beats ABM Industries on 10 of the 17 factors compared between the two stocks.
About Healthcare Services Group
Healthcare Services Group, Inc. provides management, administrative and operating services to the housekeeping, laundry, linen, facility maintenance and dietary service departments of the healthcare industry, including nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States. The Company operates through two segments: housekeeping, laundry, linen and other services (Housekeeping), and dietary department services (Dietary). Its housekeeping service involves the management of a client’s housekeeping department, which is responsible for the cleaning, disinfecting and sanitizing resident rooms and common areas of a client’s facility. Its dietary services consist of managing the client’s dietary department, which is responsible for food purchasing, meal preparation and providing professional dietitian services, including the development of menus that meet the dietary needs of residents.
About ABM Industries
ABM Industries Incorporated is a provider of integrated facility solutions. The Company operates through five segments: Janitorial, Facility Services, Parking, Building & Energy Solutions, and other. Its Janitorial segment provides a range of cleaning services for commercial office buildings, data centers, educational institutions, government buildings, health facilities, industrial buildings, retail stores, sport event facilities and transportation hubs. Its Facility Services segment provides onsite mechanical engineering and technical services and solutions relating to a range of facilities and infrastructure systems. Its Parking segment provides parking and transportation services. Its Building & Energy Solutions segment provides energy solutions; electrical; heating, ventilation and air conditioning; lighting, and other general maintenance and repair services for clients. Its other segment provides facility solutions to airlines and airports.
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