Select Medical (NYSE: SEM) and Diplomat Pharmacy (NYSE:DPLO) are both medical companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, earnings, dividends and risk.
Volatility and Risk
Select Medical has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500. Comparatively, Diplomat Pharmacy has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.
Valuation and Earnings
This table compares Select Medical and Diplomat Pharmacy’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Select Medical||$4.29 billion||0.55||$115.41 million||$0.73||24.11|
|Diplomat Pharmacy||$4.41 billion||0.29||$28.27 million||$0.10||182.80|
Select Medical has higher earnings, but lower revenue than Diplomat Pharmacy. Select Medical is trading at a lower price-to-earnings ratio than Diplomat Pharmacy, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings for Select Medical and Diplomat Pharmacy, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Select Medical currently has a consensus price target of $19.60, suggesting a potential upside of 11.36%. Diplomat Pharmacy has a consensus price target of $19.94, suggesting a potential upside of 9.07%. Given Select Medical’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Select Medical is more favorable than Diplomat Pharmacy.
This table compares Select Medical and Diplomat Pharmacy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider & Institutional Ownership
77.9% of Select Medical shares are held by institutional investors. Comparatively, 72.5% of Diplomat Pharmacy shares are held by institutional investors. 19.9% of Select Medical shares are held by insiders. Comparatively, 30.2% of Diplomat Pharmacy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Select Medical beats Diplomat Pharmacy on 10 of the 14 factors compared between the two stocks.
Select Medical 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.
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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