Quest Diagnostics (NYSE: DGX) and Diplomat Pharmacy (NYSE:DPLO) are both healthcare facilities & services – nec companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, profitability, dividends, valuation and risk.

Valuation & Earnings

This table compares Quest Diagnostics and Diplomat Pharmacy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Quest Diagnostics $7.52 billion 1.68 $645.00 million $4.80 19.30
Diplomat Pharmacy $4.41 billion 0.29 $28.27 million $0.12 156.25

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

Risk & Volatility

Quest Diagnostics has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500. Comparatively, Diplomat Pharmacy has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.

Institutional and Insider Ownership

89.0% of Quest Diagnostics shares are owned by institutional investors. Comparatively, 67.4% of Diplomat Pharmacy shares are owned by institutional investors. 1.8% of Quest Diagnostics shares are owned by company insiders. Comparatively, 30.2% of Diplomat Pharmacy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Quest Diagnostics and Diplomat Pharmacy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Quest Diagnostics 8.82% 15.53% 7.18%
Diplomat Pharmacy 0.27% 7.97% 4.47%

Dividends

Quest Diagnostics pays an annual dividend of $1.80 per share and has a dividend yield of 1.9%. Diplomat Pharmacy does not pay a dividend. Quest Diagnostics pays out 37.5% of its earnings in the form of a dividend. Diplomat Pharmacy has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Quest Diagnostics and Diplomat Pharmacy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quest Diagnostics 1 12 6 0 2.26
Diplomat Pharmacy 1 4 3 0 2.25

Quest Diagnostics currently has a consensus target price of $104.42, suggesting a potential upside of 12.69%. Diplomat Pharmacy has a consensus target price of $19.53, suggesting a potential upside of 4.17%. Given Quest Diagnostics’ stronger consensus rating and higher possible upside, research analysts clearly believe Quest Diagnostics is more favorable than Diplomat Pharmacy.

Summary

Quest Diagnostics beats Diplomat Pharmacy on 12 of the 17 factors compared between the two stocks.

Quest Diagnostics Company Profile

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.

Diplomat Pharmacy Company Profile

Diplomat Pharmacy, Inc. (Diplomat) operates a specialty pharmacy business, which stocks, dispenses and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. The Company operates through specialty pharmacy services segment. The Company’s primary focus is on medication management programs for individuals with chronic diseases, including oncology, immunology, hepatitis, multiple sclerosis, specialty infusion therapy, and various other serious and/or long-term conditions. The Company provides specialty pharmacy support services to a national network of retailers and independent pharmacy groups, hospitals and health systems. The Company offers various services, such as specialty drug dispensing, retail specialty services, hospital and health system services, and hub services. The Company’s patient care system is used to coordinate and track patient adherence and safety.

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