Head-To-Head Contrast: Mednax (NYSE:MD) versus Quest Diagnostics (DGX)

Mednax (NYSE: MD) and Quest Diagnostics (NYSE:DGX) are both mid-cap medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.

Institutional & Insider Ownership

98.5% of Mednax shares are held by institutional investors. Comparatively, 89.2% of Quest Diagnostics shares are held by institutional investors. 2.4% of Mednax shares are held by company insiders. Comparatively, 1.8% of Quest Diagnostics shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Mednax and Quest Diagnostics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mednax 7.76% 10.80% 5.57%
Quest Diagnostics 8.82% 15.53% 7.18%

Dividends

Quest Diagnostics pays an annual dividend of $1.80 per share and has a dividend yield of 1.8%. Mednax does not pay a dividend. Quest Diagnostics pays out 37.5% of its earnings in the form of a dividend. Quest Diagnostics has raised its dividend for 5 consecutive years.

Volatility & Risk

Mednax has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500. Comparatively, Quest Diagnostics has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Mednax and Quest Diagnostics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mednax 1 8 2 0 2.09
Quest Diagnostics 1 12 6 0 2.26

Mednax presently has a consensus target price of $54.50, suggesting a potential upside of 7.45%. Quest Diagnostics has a consensus target price of $104.53, suggesting a potential upside of 4.28%. Given Mednax’s higher possible upside, equities research analysts clearly believe Mednax is more favorable than Quest Diagnostics.

Valuation & Earnings

This table compares Mednax and Quest Diagnostics’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mednax $3.18 billion 1.49 $324.91 million $2.83 17.92
Quest Diagnostics $7.52 billion 1.82 $645.00 million $4.80 20.88

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

Summary

Quest Diagnostics beats Mednax on 13 of the 17 factors compared between the two stocks.

Mednax Company Profile

MEDNAX, Inc. is a provider of physician services, including newborn, anesthesia, maternal-fetal, teleradiology, pediatric cardiology and other pediatric subspecialty care. As of December 31, 2016, the Company’s national network consisted of over 3,600 affiliated physicians, including over 1,130 physicians providing neonatal clinical care, in 35 states and Puerto Rico, primarily within hospital-based neonatal intensive care units (NICUs), to babies born prematurely or with medical complications. As of December 31, 2016, the Company had over 1,390 affiliated physicians providing anesthesia care to patients in connection with surgical and other procedures, as well as pain management. As of December 31, 2016, the Company had 270 affiliated physicians providing maternal-fetal and obstetrical medical care to expectant mothers experiencing complicated pregnancies primarily in areas where its affiliated neonatal physicians practice.

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.

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