Universal Health Services (NYSE: UHS) and Select Medical Holdings Corporation (NYSE:SEM) are both mid-cap medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Insider and Institutional Ownership

85.1% of Universal Health Services shares are held by institutional investors. Comparatively, 79.0% of Select Medical Holdings Corporation shares are held by institutional investors. 13.2% of Universal Health Services shares are held by company insiders. Comparatively, 19.9% of Select Medical Holdings Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

Universal Health Services has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500. Comparatively, Select Medical Holdings Corporation has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Universal Health Services and Select Medical Holdings Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal Health Services 0 7 7 0 2.50
Select Medical Holdings Corporation 1 2 3 0 2.33

Universal Health Services currently has a consensus target price of $134.09, suggesting a potential upside of 19.57%. Select Medical Holdings Corporation has a consensus target price of $18.80, suggesting a potential downside of 1.31%. Given Universal Health Services’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Universal Health Services is more favorable than Select Medical Holdings Corporation.

Valuation and Earnings

This table compares Universal Health Services and Select Medical Holdings Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Universal Health Services $10.11 billion 1.06 $1.71 billion $7.35 15.26
Select Medical Holdings Corporation $4.26 billion 0.59 $474.80 million $0.64 29.77

Universal Health Services has higher revenue and earnings than Select Medical Holdings Corporation. Universal Health Services is trading at a lower price-to-earnings ratio than Select Medical Holdings Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Universal Health Services and Select Medical Holdings Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Universal Health Services 7.10% 15.49% 7.08%
Select Medical Holdings Corporation 1.95% 9.61% 1.84%

Dividends

Universal Health Services pays an annual dividend of $0.40 per share and has a dividend yield of 0.4%. Select Medical Holdings Corporation does not pay a dividend. Universal Health Services pays out 5.4% of its earnings in the form of a dividend.

Summary

Universal Health Services beats Select Medical Holdings Corporation on 12 of the 16 factors compared between the two stocks.

Universal Health Services Company Profile

Universal Health Services, Inc. is a holding company. The Company’s principal business is owning and operating, through its subsidiaries, acute care hospitals and outpatient facilities, and behavioral healthcare facilities. The Company’s segments include Acute Care Hospital Services, Behavioral Health Services and Other. As of February 28, 2017, the Company owned and/or operated 319 inpatient facilities, and 33 outpatient and other facilities, located in 37 states, Washington, District of Columbia, the United Kingdom, Puerto Rico and the United States Virgin Islands. The Company’s hospitals provide a range of services, such as oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. As of February 28, 2017, its acute care facilities located in the United States included 26 inpatient acute care hospitals; four free-standing emergency departments, and four outpatient surgery/cancer care centers and one surgical hospital.

Select Medical Holdings Corporation Company Profile

Select Medical Holdings Corporation is an operator of specialty hospitals, outpatient rehabilitation clinics and occupational medicine centers in the United States. The Company’s segments include specialty hospitals, outpatient rehabilitation, Concentra and Other. The specialty hospitals segment consists of hospitals designed to serve the needs of long term acute patients and hospitals designed to serve patients that require intensive medical rehabilitation care. The outpatient rehabilitation segment consists of clinics that provide physical, occupational, and speech rehabilitation services. The Concentra segment consists of medical centers and contract services provided at employer worksites and Department of Veterans Affairs community-based outpatient clinics (CBOCs) that deliver occupational medicine, physical therapy, veteran’s healthcare, and consumer health services. As of December 31, 2016, the Company had operations in 46 states and the District of Columbia.

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