DaVita HealthCare Partners (NYSE: DVA) and HealthStream (NASDAQ:HSTM) are both medical companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, profitabiliy, analyst recommendations, institutional ownership, earnings, risk and valuation.

Profitability

This table compares DaVita HealthCare Partners and HealthStream’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DaVita HealthCare Partners 8.68% 14.02% 3.78%
HealthStream 1.85% 2.27% 1.65%

Volatility and Risk

DaVita HealthCare Partners has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500. Comparatively, HealthStream has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500.

Earnings and Valuation

This table compares DaVita HealthCare Partners and HealthStream’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DaVita HealthCare Partners $15.01 billion 0.72 $2.45 billion $6.50 8.70
HealthStream $238.45 million 3.08 $23.61 million $0.14 164.43

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for DaVita HealthCare Partners and HealthStream, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DaVita HealthCare Partners 1 6 2 0 2.11
HealthStream 0 3 4 0 2.57

DaVita HealthCare Partners currently has a consensus target price of $67.88, suggesting a potential upside of 20.09%. HealthStream has a consensus target price of $26.00, suggesting a potential upside of 12.95%. Given DaVita HealthCare Partners’ higher possible upside, analysts clearly believe DaVita HealthCare Partners is more favorable than HealthStream.

Institutional & Insider Ownership

84.3% of DaVita HealthCare Partners shares are held by institutional investors. Comparatively, 76.8% of HealthStream shares are held by institutional investors. 2.1% of DaVita HealthCare Partners shares are held by insiders. Comparatively, 21.1% of HealthStream 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.

Summary

DaVita HealthCare Partners beats HealthStream on 8 of the 14 factors compared between the two stocks.

About DaVita HealthCare Partners

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.

About HealthStream

HealthStream, Inc. (HealthStream) provides workforce, patient experience and provider solutions for healthcare organizations. The Company operates in three segments: HealthStream Workforce Solutions, HealthStream Patient Experience Solutions and HealthStream Provider Solutions. HealthStream’s products and services are organized into three segments: Workforce Solutions, Patient Experience Solutions, and Provider Solutions. HealthStream’s solutions are provided to a range of customers within the healthcare industry across the continuum of care. Delivered primarily as Software-as-a-Service (SaaS), the Company’s solutions focus on challenges facing the healthcare workforce and healthcare organizations, including the need to manage, retain, engage and develop healthcare workforce talent; meet compliance requirements; manage ongoing medical staff credentialing and privileging processes, and deliver patient experiences of care in healthcare organizations.

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