Pharmerica Corporation (NYSE: PMC) and Cardinal Health (NYSE:CAH) are both medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitabiliy, dividends, valuation, analyst recommendations, earnings, risk and institutional ownership.

Volatility and Risk

Pharmerica Corporation has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500. Comparatively, Cardinal Health has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500.

Dividends

Cardinal Health pays an annual dividend of $1.85 per share and has a dividend yield of 2.7%. Pharmerica Corporation does not pay a dividend. Cardinal Health pays out 45.8% of its earnings in the form of a dividend. Cardinal Health has raised its dividend for 12 consecutive years.

Profitability

This table compares Pharmerica Corporation and Cardinal Health’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pharmerica Corporation 1.05% 10.94% 4.84%
Cardinal Health 0.99% 26.20% 4.81%

Valuation and Earnings

This table compares Pharmerica Corporation and Cardinal Health’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pharmerica Corporation $2.21 billion 0.41 $133.00 million $0.74 39.32
Cardinal Health $129.98 billion 0.16 $2.96 billion $4.04 16.66

Cardinal Health has higher revenue and earnings than Pharmerica Corporation. Cardinal Health is trading at a lower price-to-earnings ratio than Pharmerica Corporation, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

92.8% of Pharmerica Corporation shares are owned by institutional investors. Comparatively, 87.1% of Cardinal Health shares are owned by institutional investors. 5.0% of Pharmerica Corporation shares are owned by company insiders. Comparatively, 0.9% of Cardinal Health shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Pharmerica Corporation and Cardinal Health, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pharmerica Corporation 1 1 1 0 2.00
Cardinal Health 0 12 3 0 2.20

Pharmerica Corporation presently has a consensus target price of $29.25, suggesting a potential upside of 0.52%. Cardinal Health has a consensus target price of $81.09, suggesting a potential upside of 20.47%. Given Cardinal Health’s stronger consensus rating and higher probable upside, analysts plainly believe Cardinal Health is more favorable than Pharmerica Corporation.

Summary

Cardinal Health beats Pharmerica Corporation on 9 of the 17 factors compared between the two stocks.

Pharmerica Corporation Company Profile

PharMerica Corporation is an institutional pharmacy services company. The Company services healthcare facilities, provides pharmacy management services to hospitals and specialty infusion services to patients outside a hospital setting, and offers the national oncology pharmacy in the United States. Its segments include institutional pharmacy, which provides pharmacy products and services to residents and patients in skilled nursing facilities, nursing centers, assisted living facilities, hospitals and other long-term alternative care settings; specialty infusion services, which provides specialty infusion services focused on providing pharmaceutical products and clinical services to patients in client facilities, hospice and outside of hospital or nursing home settings, and specialty oncology pharmacy, which provides dispensing of oncology drugs, care management and other related services to patients, oncology practices and hospitals.

Cardinal Health Company Profile

Cardinal Health, Inc. is a healthcare services and products company. The Company operates through two segments: Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare and consumer products. This segment also operates nuclear pharmacies and cyclotron facilities; provides pharmacy management services to hospitals, as well as medication therapy management and patient outcomes services to hospitals, other healthcare providers and payers, and provides services to healthcare companies. The Medical segment distributes a range of medical, surgical and laboratory products, and provides services to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers. This segment also manufactures, sources and develops its own Cardinal Health brand medical and surgical products. It provides post-acute care management and transition services, and software to hospitals.

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