Reviewing Humana (NYSE:HUM) & Molina Healthcare (MOH)

Humana (NYSE: HUM) and Molina Healthcare (NYSE:MOH) are both mid-cap medical companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, earnings, dividends and risk.

Dividends

Humana pays an annual dividend of $1.60 per share and has a dividend yield of 0.6%. Molina Healthcare does not pay a dividend. Humana pays out 13.1% of its earnings in the form of a dividend. Humana has raised its dividend for 6 consecutive years.

Profitability

This table compares Humana and Molina Healthcare’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Humana 3.37% 15.85% 5.76%
Molina Healthcare -1.07% 16.10% 3.35%

Institutional and Insider Ownership

95.5% of Humana shares are owned by institutional investors. Comparatively, 95.3% of Molina Healthcare shares are owned by institutional investors. 0.8% of Humana shares are owned by company insiders. Comparatively, 6.2% of Molina Healthcare shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Humana and Molina Healthcare’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Humana $53.87 billion 0.69 $2.66 billion $12.25 21.14
Molina Healthcare $18.51 billion 0.21 $106.00 million ($3.61) -18.60

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

Volatility & Risk

Humana has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, Molina Healthcare has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Humana and Molina Healthcare, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Humana 0 8 12 0 2.60
Molina Healthcare 3 6 5 0 2.14

Humana currently has a consensus target price of $253.11, indicating a potential downside of 2.26%. Molina Healthcare has a consensus target price of $62.50, indicating a potential downside of 6.91%. Given Humana’s stronger consensus rating and higher possible upside, research analysts plainly believe Humana is more favorable than Molina Healthcare.

Summary

Humana beats Molina Healthcare on 12 of the 17 factors compared between the two stocks.

Humana Company Profile

Humana Inc. is a health and well-being company. The Company’s segments include Retail, Group and Specialty, Healthcare Services and Individual Commercial. The Retail segment consists of Medicare benefits, as well as individual commercial fully insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health and financial protection products. The Group and Specialty segment consists of employer group commercial fully insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health. The Healthcare Services segment includes services offered to its health plan members, as well as to third parties, including pharmacy solutions, provider services, home-based services and clinical programs, as well as services and capabilities to manage population health. The Individual Commercial segment includes Individual Commercial products marketed under the HumanaOne brand.

Molina Healthcare Company Profile

Molina Healthcare, Inc. offers Medicaid-related solutions for low-income families and individuals, and assists government agencies in their administration of the Medicaid program. The Company operates through three segments: Health Plans, Molina Medicaid Solutions and Other, which includes its Pathways Health and Community Support LLC (Pathways) business. It arranges healthcare services for persons served by Medicaid, Medicare, the Children’s Health Insurance Program (CHIP) and the Marketplace, and products to assist government agencies in their administration of the Medicaid program. As of December 31, 2016, the Company’s Health Plans segment consisted of health plans in 12 states and the Commonwealth of Puerto Rico, and its direct delivery business. The Molina Medicaid Solutions segment provides support to state government agencies in the administration of their Medicaid programs, including business processing, information technology development, and administrative services.

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