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

Analyst Ratings

This is a summary of current ratings and target prices for Acadia Healthcare and Quest Diagnostics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acadia Healthcare 0 3 9 1 2.85
Quest Diagnostics 1 7 6 1 2.47

Acadia Healthcare currently has a consensus price target of $59.67, indicating a potential upside of 30.93%. Quest Diagnostics has a consensus price target of $107.97, indicating a potential upside of 0.88%. Given Acadia Healthcare’s stronger consensus rating and higher probable upside, analysts plainly believe Acadia Healthcare is more favorable than Quest Diagnostics.

Volatility & Risk

Acadia Healthcare has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500. Comparatively, Quest Diagnostics has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500.

Insider and Institutional Ownership

90.1% of Quest Diagnostics shares are owned by institutional investors. 11.1% of Acadia Healthcare shares are owned by insiders. Comparatively, 1.8% of Quest Diagnostics shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Quest Diagnostics pays an annual dividend of $1.80 per share and has a dividend yield of 1.7%. Acadia Healthcare does not pay a dividend. Quest Diagnostics pays out 36.3% of its earnings in the form of a dividend. Quest Diagnostics has raised its dividend for 5 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Acadia Healthcare 0.30% 8.69% 3.16%
Quest Diagnostics 9.28% 15.66% 7.24%

Earnings and Valuation

This table compares Acadia Healthcare and Quest Diagnostics’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Acadia Healthcare $2.83 billion 1.41 $574.61 million $0.09 506.33
Quest Diagnostics $7.59 billion 1.92 $1.44 billion $4.96 21.58

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

Summary

Quest Diagnostics beats Acadia Healthcare on 11 of the 17 factors compared between the two stocks.

About Acadia Healthcare

Acadia Healthcare Company, Inc. is a provider of behavioral healthcare services, with operations in the United States and the United Kingdom. The Company focuses on acquiring and developing behavioral healthcare facilities. The Company operates through two segments: U.S. Facilities and U.K. Facilities. The Company is engaged in operating acute inpatient psychiatric facilities, specialty treatment facilities, residential treatment centers and facilities providing outpatient behavioral healthcare services. As of December 31, 2016, the U.S. Facilities segment included 208 behavioral healthcare facilities with approximately 8,500 beds in 39 states and Puerto Rico, and the U.K. Facilities segment included 365 behavioral healthcare facilities with approximately 8,600 beds in the United Kingdom. As of December 31, 2016, the Company had operated 573 behavioral healthcare facilities with approximately 17,100 beds in 39 states, the United Kingdom and Puerto Rico.

About Quest Diagnostics

Quest Diagnostics Incorporated is a provider of diagnostic information services. The Company operates through two businesses: Diagnostic Information Services and Diagnostic Solutions. The Diagnostic Information Services business develops and delivers diagnostic testing information and services, providing insights that empower and enable a range of customers, including patients, clinicians, hospitals, integrated delivery networks (IDNs), health plans, employers and accountable care organizations (ACOs). Its Diagnostic Solutions group includes its risk assessment services business, which offers solutions for insurers, and its healthcare information technology businesses, which offers solutions for healthcare providers. The Company’s services are provided under the Quest Diagnostics brand, but it also provides services under other brands, including AmeriPath, Dermpath Diagnostics, Focus Diagnostics, Athena Diagnostics, ExamOne, Quanum and Care360.

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