Diplomat Pharmacy (NYSE: DPLO) and HealthStream (NASDAQ:HSTM) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Diplomat Pharmacy 0.18% 8.30% 4.70%
HealthStream 2.36% 2.46% 1.79%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Diplomat Pharmacy and HealthStream, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Diplomat Pharmacy 0 4 4 0 2.50
HealthStream 0 4 2 0 2.33

Diplomat Pharmacy currently has a consensus price target of $20.31, indicating a potential upside of 1.21%. HealthStream has a consensus price target of $24.40, indicating a potential upside of 5.35%. Given HealthStream’s higher probable upside, analysts plainly believe HealthStream is more favorable than Diplomat Pharmacy.

Institutional & Insider Ownership

72.2% of Diplomat Pharmacy shares are owned by institutional investors. Comparatively, 74.3% of HealthStream shares are owned by institutional investors. 30.2% of Diplomat Pharmacy shares are owned by insiders. Comparatively, 21.1% of HealthStream shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Diplomat Pharmacy and HealthStream’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Diplomat Pharmacy $4.41 billion 0.31 $28.27 million $0.10 200.70
HealthStream $225.97 million 3.27 $3.75 million $0.18 128.67

Diplomat Pharmacy has higher revenue and earnings than HealthStream. HealthStream 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

Diplomat Pharmacy has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, HealthStream has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Summary

Diplomat Pharmacy beats HealthStream on 8 of the 14 factors compared between the two stocks.

About Diplomat Pharmacy

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.

About HealthStream

HealthStream, Inc. (HealthStream) provides workforce, patient experience and provider solutions for healthcare organizations. The Company operates in three segments: HealthStream Workforce Solutions, HealthStream Patient Experience Solutions and HealthStream Provider Solutions. HealthStream’s products and services are organized into three segments: Workforce Solutions, Patient Experience Solutions, and Provider Solutions. HealthStream’s solutions are provided to a range of customers within the healthcare industry across the continuum of care. Delivered primarily as Software-as-a-Service (SaaS), the Company’s solutions focus on challenges facing the healthcare workforce and healthcare organizations, including the need to manage, retain, engage and develop healthcare workforce talent; meet compliance requirements; manage ongoing medical staff credentialing and privileging processes, and deliver patient experiences of care in healthcare organizations.

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