DaVita HealthCare Partners (NYSE: DVA) and Surgical Care Affiliates (NASDAQ:SCAI) are both medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, valuation, analyst recommendations, dividends, risk and institutional ownership.

Profitability

This table compares DaVita HealthCare Partners and Surgical Care Affiliates’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DaVita HealthCare Partners 8.68% 14.02% 3.78%
Surgical Care Affiliates 21.52% 13.07% 12.83%

Institutional and Insider Ownership

82.8% of DaVita HealthCare Partners shares are owned by institutional investors. 2.0% of DaVita HealthCare Partners shares are owned by insiders. Comparatively, 3.3% of Surgical Care Affiliates shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

DaVita HealthCare Partners has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, Surgical Care Affiliates has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for DaVita HealthCare Partners and Surgical Care Affiliates, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DaVita HealthCare Partners 2 6 2 0 2.00
Surgical Care Affiliates 0 2 0 0 2.00

DaVita HealthCare Partners presently has a consensus target price of $65.00, indicating a potential upside of 4.00%. Surgical Care Affiliates has a consensus target price of $50.00, indicating a potential downside of 10.51%. Given DaVita HealthCare Partners’ higher possible upside, equities analysts clearly believe DaVita HealthCare Partners is more favorable than Surgical Care Affiliates.

Valuation and Earnings

This table compares DaVita HealthCare Partners and Surgical Care Affiliates’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DaVita HealthCare Partners $15.01 billion 0.80 $2.45 billion $6.50 9.62
Surgical Care Affiliates N/A N/A N/A $0.55 101.58

DaVita HealthCare Partners has higher revenue and earnings than Surgical Care Affiliates. DaVita HealthCare Partners is trading at a lower price-to-earnings ratio than Surgical Care Affiliates, indicating that it is currently the more affordable of the two stocks.

Summary

DaVita HealthCare Partners beats Surgical Care Affiliates on 7 of the 10 factors compared between the two stocks.

DaVita HealthCare Partners Company Profile

DaVita Inc., formerly DaVita HealthCare Partners Inc., operates two divisions: DaVita Kidney Care (Kidney Care) and DaVita Medical Group (DMG). The Kidney Care division consists of its the United States dialysis and related lab services, its ancillary services and strategic initiatives, including its international operations, and its corporate administrative support. Its DMG division is a patient- and physician-focused integrated healthcare delivery and management company that provides medical services to members through capitation contracts. Its segments include U.S. dialysis and related lab services, DMG, and Other-Ancillary services and strategic initiatives. Its U.S. dialysis and related lab services line of business provide kidney dialysis services in the United States for patients suffering from chronic kidney failure, also known as end stage renal disease (ESRD). As of December 31, 2016, it had operated or provided administrative services to 154 outpatient dialysis centers.

Surgical Care Affiliates Company Profile

Surgical Care Affiliates, Inc. is a provider of solutions to physicians, health plans and health systems to optimize surgical care. The Company offers tools and systems in the areas of clinical benchmarking, clinical best practices, operating efficiency, care coordination and supply chain management. As of December 31, 2016, the Company operated a network of surgical facilities in the United States, which included 197 ambulatory surgery centers (ASCs) and seven surgical hospitals in partnership with approximately 3,000 physician partners. The Company’s operations consist of its ownership and management of ASCs and surgical hospitals. Its ASCs provide the facilities, equipment, supplies and clinical support staff necessary to provide non-emergency surgical services to patients not requiring hospitalization. Its surgical hospitals allow physicians to perform a range of surgical procedures, including surgeries, and allow patients to stay in the hospital for several nights to recover.

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