Kindred Healthcare (NYSE: KND) and Surgical Care Affiliates (NASDAQ:SCAI) are both medical companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, valuation, dividends, risk and profitability.

Insider and Institutional Ownership

88.1% of Kindred Healthcare shares are owned by institutional investors. 3.0% of Kindred Healthcare shares are owned by insiders. Comparatively, 3.3% of Surgical Care Affiliates shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Kindred Healthcare has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500. Comparatively, Surgical Care Affiliates has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Dividends

Kindred Healthcare pays an annual dividend of $0.24 per share and has a dividend yield of 3.6%. Surgical Care Affiliates does not pay a dividend. Kindred Healthcare pays out -1.9% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current recommendations for Kindred Healthcare and Surgical Care Affiliates, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kindred Healthcare 2 4 1 0 1.86
Surgical Care Affiliates 0 2 0 0 2.00

Kindred Healthcare currently has a consensus price target of $9.50, suggesting a potential upside of 42.86%. Surgical Care Affiliates has a consensus price target of $50.00, suggesting a potential downside of 10.51%. Given Kindred Healthcare’s higher probable upside, analysts clearly believe Kindred Healthcare is more favorable than Surgical Care Affiliates.

Valuation and Earnings

This table compares Kindred Healthcare and Surgical Care Affiliates’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kindred Healthcare $7.08 billion 0.08 $470.57 million ($12.82) -0.52
Surgical Care Affiliates N/A N/A N/A $0.55 101.58

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

Profitability

This table compares Kindred Healthcare and Surgical Care Affiliates’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kindred Healthcare -16.31% 3.49% 0.53%
Surgical Care Affiliates 21.52% 13.07% 12.83%

Summary

Kindred Healthcare beats Surgical Care Affiliates on 7 of the 13 factors compared between the two stocks.

Kindred Healthcare Company Profile

Kindred Healthcare, Inc., incorporated on March 27, 1998, is a healthcare services company. The Company, through its subsidiaries, operates transitional care (TC) hospitals, a home health, hospice and community care business, inpatient rehabilitation hospitals (IRFs), a contract rehabilitation services business, nursing centers and assisted living facilities across the United States. The Company operates through divisions: the Kindred at Home division, the hospital division, the Kindred Rehabilitation Services division and the nursing center division. These divisions represent six segments: home health services, hospice services, hospitals, Kindred Hospital Rehabilitation Services, RehabCare and nursing centers. The home health services and hospice services operating segments are contained within the Kindred at Home division while the Kindred Hospital Rehabilitation Services and RehabCare operating segments are both contained within the Kindred Rehabilitation Services division.

Surgical Care Affiliates Company Profile

Surgical Care Affiliates, Inc. is a provider of solutions to physicians, health plans and health systems to optimize surgical care. The Company offers tools and systems in the areas of clinical benchmarking, clinical best practices, operating efficiency, care coordination and supply chain management. As of December 31, 2016, the Company operated a network of surgical facilities in the United States, which included 197 ambulatory surgery centers (ASCs) and seven surgical hospitals in partnership with approximately 3,000 physician partners. The Company’s operations consist of its ownership and management of ASCs and surgical hospitals. Its ASCs provide the facilities, equipment, supplies and clinical support staff necessary to provide non-emergency surgical services to patients not requiring hospitalization. Its surgical hospitals allow physicians to perform a range of surgical procedures, including surgeries, and allow patients to stay in the hospital for several nights to recover.

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