Laboratory Corporation of America Holdings (NYSE: LH) and Tenet Healthcare Corporation (NYSE:THC) are both medical companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Institutional & Insider Ownership

93.2% of Laboratory Corporation of America Holdings shares are held by institutional investors. 0.9% of Laboratory Corporation of America Holdings shares are held by company insiders. Comparatively, 3.1% of Tenet Healthcare Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Laboratory Corporation of America Holdings and Tenet Healthcare Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Laboratory Corporation of America Holdings $9.67 billion 1.58 $1.86 billion $7.12 21.11
Tenet Healthcare Corporation $19.32 billion 0.08 $2.07 billion ($1.95) -7.89

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

Risk & Volatility

Laboratory Corporation of America Holdings has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500. Comparatively, Tenet Healthcare Corporation has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Laboratory Corporation of America Holdings and Tenet Healthcare Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Laboratory Corporation of America Holdings 0 4 6 0 2.60
Tenet Healthcare Corporation 0 9 5 0 2.36

Laboratory Corporation of America Holdings presently has a consensus price target of $165.10, indicating a potential upside of 9.83%. Tenet Healthcare Corporation has a consensus price target of $20.75, indicating a potential upside of 34.83%. Given Tenet Healthcare Corporation’s higher possible upside, analysts clearly believe Tenet Healthcare Corporation is more favorable than Laboratory Corporation of America Holdings.

Profitability

This table compares Laboratory Corporation of America Holdings and Tenet Healthcare Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Laboratory Corporation of America Holdings 7.57% 16.85% 6.55%
Tenet Healthcare Corporation -0.97% -2.00% -0.09%

Summary

Laboratory Corporation of America Holdings beats Tenet Healthcare Corporation on 8 of the 13 factors compared between the two stocks.

About Laboratory Corporation of America Holdings

Laboratory Corporation of America Holdings is a life sciences company that is integrated in guiding patient care, providing clinical laboratory and end-to-end drug development services. The Company operates as a healthcare diagnostics company. The Company operates through two segments: LabCorp Diagnostics (LCD) and Covance Drug Development (CDD). The LCD segment is an independent clinical laboratory business, which offers menu of frequently requested and specialty testing through an integrated network of primary and specialty laboratories across the United States. The CDD segment offers drug development services, and provides a range of drug research and development (R&D) and market access services to biopharmaceutical companies and medical device companies across the world. It serves a range of customers, including managed care organizations (MCOs), biopharmaceutical companies, governmental agencies, physicians and other healthcare providers.

About Tenet Healthcare Corporation

Tenet Healthcare Corporation (Tenet) is a healthcare services company. The Company operates regionally focused, integrated healthcare delivery networks in large urban and suburban markets in the United States. The Company’s segments include Hospital Operations and Other, Ambulatory Care and Conifer. As of December 31, 2016, its subsidiaries operated 79 hospitals, including three academic medical centers, two children’s hospitals, two specialty hospitals and one critical access hospital. The Company’s Ambulatory Care segment includes the operations of its USPI joint venture and its Aspen facilities. As of December 31, 2016, Conifer provided one or more of the business process services described above from 20 service centers to more than 800 Tenet and non-Tenet hospital and other clients in over 40 states. As of December 31, 2016, the Company operated 20 short-stay surgical hospitals, over 470 outpatient centers, and nine facilities in the United Kingdom.

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