Quest Diagnostics (NYSE: DGX) and Fresenius Medical Care Corporation (NYSE:FMS) are both large-cap medical companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, dividends, risk, analyst recommendations and earnings.

Valuation and Earnings

This table compares Quest Diagnostics and Fresenius Medical Care Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Quest Diagnostics $7.59 billion 1.87 $1.44 billion $4.96 20.94
Fresenius Medical Care Corporation $20.52 billion 1.47 $3.75 billion $2.18 22.49

Fresenius Medical Care Corporation has higher revenue and earnings than Quest Diagnostics. Quest Diagnostics is trading at a lower price-to-earnings ratio than Fresenius Medical Care Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Quest Diagnostics and Fresenius Medical Care Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Quest Diagnostics 9.28% 15.66% 7.24%
Fresenius Medical Care Corporation 7.06% 11.57% 4.97%

Dividends

Quest Diagnostics pays an annual dividend of $1.80 per share and has a dividend yield of 1.7%. Fresenius Medical Care Corporation pays an annual dividend of $0.37 per share and has a dividend yield of 0.8%. Quest Diagnostics pays out 36.3% of its earnings in the form of a dividend. Fresenius Medical Care Corporation pays out 17.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Fresenius Medical Care Corporation has raised its dividend for 5 consecutive years.

Institutional & Insider Ownership

87.1% of Quest Diagnostics shares are held by institutional investors. Comparatively, 2.6% of Fresenius Medical Care Corporation shares are held by institutional investors. 1.8% of Quest Diagnostics shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Quest Diagnostics and Fresenius Medical Care Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quest Diagnostics 1 6 6 1 2.50
Fresenius Medical Care Corporation 0 3 7 0 2.70

Quest Diagnostics presently has a consensus target price of $109.54, suggesting a potential upside of 5.46%. Fresenius Medical Care Corporation has a consensus target price of $46.00, suggesting a potential downside of 6.18%. Given Quest Diagnostics’ higher possible upside, analysts clearly believe Quest Diagnostics is more favorable than Fresenius Medical Care Corporation.

Volatility & Risk

Quest Diagnostics has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500. Comparatively, Fresenius Medical Care Corporation has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500.

Summary

Quest Diagnostics beats Fresenius Medical Care Corporation on 11 of the 18 factors compared between the two stocks.

Quest Diagnostics Company Profile

Quest Diagnostics Incorporated is a provider of diagnostic information services. The Company operates through two businesses: Diagnostic Information Services and Diagnostic Solutions. The Diagnostic Information Services business develops and delivers diagnostic testing information and services, providing insights that empower and enable a range of customers, including patients, clinicians, hospitals, integrated delivery networks (IDNs), health plans, employers and accountable care organizations (ACOs). Its Diagnostic Solutions group includes its risk assessment services business, which offers solutions for insurers, and its healthcare information technology businesses, which offers solutions for healthcare providers. The Company’s services are provided under the Quest Diagnostics brand, but it also provides services under other brands, including AmeriPath, Dermpath Diagnostics, Focus Diagnostics, Athena Diagnostics, ExamOne, Quanum and Care360.

Fresenius Medical Care Corporation Company Profile

Fresenius Medical Care AG & Co. KGaA is a kidney dialysis company. The Company provides dialysis care and related services to persons suffering from end-stage renal disease (ESRD), as well as other healthcare services. The Company’s segments include North America Segment, the Europe, Middle East and Africa (EMEA) Segment, the Asia-Pacific Segment and the Latin America Segment. The Company develops and manufactures a range of dialysis machines, systems and disposable products. As of December 31, 2016, the Company sold its products to customers in more than 120 countries and also used in its internal healthcare service operations. The Company’s Care Coordination services include coordinated delivery of pharmacy services, vascular, cardiovascular and endovascular specialty services, non-dialysis laboratory testing services, physician services, hospitalist and intensivist services, health plan services, ambulatory surgery center services and urgent care services.

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