HealthSouth Corporation (NYSE: HLS) and TeamHealth Holdings (NYSE:TMH) are both medical companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.

Insider and Institutional Ownership

92.4% of HealthSouth Corporation shares are held by institutional investors. 1.6% of HealthSouth Corporation shares are held by company insiders. Comparatively, 1.3% of TeamHealth Holdings shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares HealthSouth Corporation and TeamHealth Holdings’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
HealthSouth Corporation $3.71 billion 1.31 $247.60 million $2.75 17.96
TeamHealth Holdings N/A N/A N/A $0.26 167.31

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

Dividends

HealthSouth Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 2.0%. TeamHealth Holdings does not pay a dividend. HealthSouth Corporation pays out 36.4% of its earnings in the form of a dividend. HealthSouth Corporation has raised its dividend for 3 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations for HealthSouth Corporation and TeamHealth Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HealthSouth Corporation 1 2 6 0 2.56
TeamHealth Holdings 0 3 0 0 2.00

HealthSouth Corporation presently has a consensus price target of $51.71, suggesting a potential upside of 4.68%. TeamHealth Holdings has a consensus price target of $43.50, suggesting a potential upside of 0.00%. Given HealthSouth Corporation’s stronger consensus rating and higher possible upside, equities analysts plainly believe HealthSouth Corporation is more favorable than TeamHealth Holdings.

Profitability

This table compares HealthSouth Corporation and TeamHealth Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HealthSouth Corporation 6.69% 22.81% 5.49%
TeamHealth Holdings 0.92% 5.98% 0.99%

Summary

HealthSouth Corporation beats TeamHealth Holdings on 12 of the 13 factors compared between the two stocks.

HealthSouth Corporation Company Profile

HealthSouth Corporation (HealthSouth) is a provider of post-acute healthcare services, offering both facility-based and home-based post-acute services in 35 states and Puerto Rico through its network of inpatient rehabilitation hospitals, home health agencies and hospice agencies. The Company manages its operations through segments, including inpatient rehabilitation, and home health and hospice. It is an owner and operator of inpatient rehabilitation hospitals. It provides specialized rehabilitative treatment on both an inpatient and outpatient basis. It offers its home health and hospice services through Encompass Home Health and Hospice business (Encompass). Encompass operates home health and hospice agencies in 25 states, with concentrations in the Southeast, Oklahoma, and Texas. As of December 31, 2016, the Company operated 123 inpatient rehabilitation hospitals. As of December 31, 2016, the Company managed five inpatient rehabilitation units through management contracts.

TeamHealth Holdings Company Profile

Team Health Holdings, Inc. is a United States-based physician services company. The Company supplies outsourced healthcare professional staffing and administrative services to hospitals and other healthcare providers in the United States. It operates through four segments: Hospital Based Services, IPC Healthcare, Specialty Services and Other Services. The Hospital Based Services segment provides healthcare service programs to users of healthcare services on a fee for service, and on a cost plus or contract basis. The IPC Healthcare segment provides acute hospital medicine and post-acute provider service programs to users of healthcare services. The Specialty Services segment provides healthcare service programs to users of healthcare services in an outpatient setting or in a non-hospital-based environment. The Other Services segment is an aggregation of locums staffing, scribes, and billing, collection and consulting services that provides a range of other healthcare services.

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