HCA Healthcare (NYSE:HCA) versus The Ensign Group (NASDAQ:ENSG) Critical Review

The Ensign Group (NASDAQ:ENSG) and HCA Healthcare (NYSE:HCA) are both large-cap healthcare companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Profitability

This table compares The Ensign Group and HCA Healthcare’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The Ensign Group	6.90%	16.75%	6.97%
HCA Healthcare	8.77%	-244.79%	11.10%

Dividends

The Ensign Group pays an annual dividend of $0.26 per share and has a dividend yield of 0.1%. HCA Healthcare pays an annual dividend of $3.12 per share and has a dividend yield of 0.7%. The Ensign Group pays out 4.1% of its earnings in the form of a dividend. HCA Healthcare pays out 10.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. The Ensign Group has increased its dividend for 18 consecutive years and HCA Healthcare has increased its dividend for 6 consecutive years.

Risk and Volatility

The Ensign Group has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500. Comparatively, HCA Healthcare has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for The Ensign Group and HCA Healthcare, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The Ensign Group	0	2	4	0	2.67
HCA Healthcare	1	7	16	0	2.62

The Ensign Group presently has a consensus target price of $216.25, suggesting a potential upside of 23.16%. HCA Healthcare has a consensus target price of $467.61, suggesting a potential downside of 0.39%. Given The Ensign Group’s stronger consensus rating and higher probable upside, research analysts clearly believe The Ensign Group is more favorable than HCA Healthcare.

Insider and Institutional Ownership

96.1% of The Ensign Group shares are held by institutional investors. Comparatively, 62.7% of HCA Healthcare shares are held by institutional investors. 4.0% of The Ensign Group shares are held by insiders. Comparatively, 1.5% of HCA Healthcare shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares The Ensign Group and HCA Healthcare”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The Ensign Group	$5.06 billion	2.02	$343.97 million	$6.38	27.52
HCA Healthcare	$75.60 billion	1.34	$6.78 billion	$29.87	15.72

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

Summary

The Ensign Group beats HCA Healthcare on 9 of the 17 factors compared between the two stocks.

About The Ensign Group

The Ensign Group, Inc. provides skilled nursing, senior living, and rehabilitative services. It operates through two segments: Skilled Services and Standard Bearer. The company's Skilled Services segment engages in the operation of skilled nursing facilities and rehabilitation therapy services for patients with chronic conditions, prolonged illness, and the elderly; and offers nursing facilities including specialty care, such as on-site dialysis, ventilator care, cardiac, and pulmonary management, as well as standard services comprising room and board, special nutritional programs, social services, recreational activities, entertainment, and other services. Its Standard Bearer segment is comprised of selected real estate properties owned by Standard Bearer and leased to skilled nursing and senior living operators. In addition, the company provides ancillary services consisting of digital x-ray, ultrasound, electrocardiograms, sub-acute services, dialysis, respiratory, and long-term care pharmacy and patient transportation to people in their homes or at long-term care facilities, as well as mobile diagnostics. It operates in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Texas, Utah, Washington and Wisconsin. The company was incorporated in 1999 and is based in San Juan Capistrano, California.

About HCA Healthcare

HCA Healthcare, Inc., through its subsidiaries, owns and operates hospitals and related healthcare entities in the United States. It operates general and acute care hospitals that offers medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic, and emergency services; and outpatient services, such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology, and physical therapy. The company also operates outpatient health care facilities consisting of freestanding ambulatory surgery centers, freestanding emergency care facilities, urgent care facilities, walk-in clinics, diagnostic and imaging centers, rehabilitation and physical therapy centers, radiation and oncology therapy centers, physician practices, and various other facilities. In addition, it operates behavioral hospitals, which provide therapeutic programs comprising child, adolescent and adult psychiatric care, adolescent and adult alcohol, drug abuse treatment, and counseling services. The company was formerly known as HCA Holdings, Inc. HCA Healthcare, Inc. was founded in 1968 and is headquartered in Nashville, Tennessee.