American Renal Associates Holdings (NYSE: ARA) and LifePoint Health (NASDAQ:LPNT) are both medical companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, institutional ownership, valuation, risk and dividends.

Profitability

This table compares American Renal Associates Holdings and LifePoint Health’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Renal Associates Holdings -1.54% 18.25% 2.62%
LifePoint Health 2.61% 7.40% 2.66%

Volatility and Risk

American Renal Associates Holdings has a beta of 3.77, suggesting that its stock price is 277% more volatile than the S&P 500. Comparatively, LifePoint Health has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.

Institutional & Insider Ownership

89.9% of American Renal Associates Holdings shares are held by institutional investors. Comparatively, 99.5% of LifePoint Health shares are held by institutional investors. 12.6% of American Renal Associates Holdings shares are held by company insiders. Comparatively, 7.3% of LifePoint Health 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.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for American Renal Associates Holdings and LifePoint Health, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Renal Associates Holdings 1 0 3 0 2.50
LifePoint Health 2 8 3 0 2.08

American Renal Associates Holdings currently has a consensus price target of $23.50, suggesting a potential upside of 63.99%. LifePoint Health has a consensus price target of $65.50, suggesting a potential upside of 13.03%. Given American Renal Associates Holdings’ stronger consensus rating and higher probable upside, research analysts plainly believe American Renal Associates Holdings is more favorable than LifePoint Health.

Valuation and Earnings

This table compares American Renal Associates Holdings and LifePoint Health’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Renal Associates Holdings $755.09 million 0.59 $150.25 million ($0.23) -62.30
LifePoint Health $6.42 billion 0.36 $760.40 million $4.48 12.94

LifePoint Health has higher revenue and earnings than American Renal Associates Holdings. American Renal Associates Holdings is trading at a lower price-to-earnings ratio than LifePoint Health, indicating that it is currently the more affordable of the two stocks.

Summary

American Renal Associates Holdings beats LifePoint Health on 7 of the 13 factors compared between the two stocks.

American Renal Associates Holdings Company Profile

American Renal Associates Holdings, Inc. is a dialysis service provider in the United States focused on joint venture (JV) partnerships with physicians. As of December 31, 2016, the Company owned and operated 214 dialysis clinics in partnership with 379 nephrologist partners treating over 14,000 patients in 25 states and the District of Columbia. The Company operates its dialysis clinics exclusively through a JV model, in which it partners primarily with local nephrologists to develop, own and operate dialysis clinics, while the providers of the majority of dialysis services in the United States operate through a combination of subsidiaries and joint ventures. It provides patient care and clinical outcomes to patients suffering from end-stage renal disease (ESRD). Its clinics offer both in center and home dialysis options to meet the needs of patients. Its clinics primarily provide in center hemodialysis treatments and ancillary items and services.

LifePoint Health Company Profile

LifePoint Health, Inc., through its subsidiaries, owns and operates community hospitals, regional health systems, physician practices, outpatient centers and post-acute facilities. As of December 31, 2016, the Company operated 72 hospital campuses in 22 states, having a total of 9,424 licensed beds. It offers a range of general and specialized healthcare services to patients through a network of hospitals and outpatient facilities. Its services include general surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, rehabilitation services and pediatric services, and in some of its hospitals, the Company offers specialized services, such as open-heart surgery, skilled nursing, psychiatric care and neuro-surgery. It provides outpatient services, such as same-day surgery, laboratory, x-ray, respiratory therapy, imaging, sports medicine and lithotripsy.

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