Analyzing Acadia Healthcare (ACHC) and Chemed (CHE)

Chemed (NYSE: CHE) and Acadia Healthcare (NASDAQ:ACHC) are both mid-cap healthcare companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, earnings, institutional ownership, profitability and dividends.

Insider & Institutional Ownership

97.7% of Chemed shares are held by institutional investors. 4.9% of Chemed shares are held by company insiders. Comparatively, 11.1% of Acadia Healthcare shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Chemed and Acadia Healthcare’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Chemed $1.58 billion 2.67 $108.74 million $4.49 58.82
Acadia Healthcare $2.85 billion 1.06 $6.14 million $1.96 17.54

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

Risk & Volatility

Chemed has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500. Comparatively, Acadia Healthcare has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Dividends

Chemed pays an annual dividend of $1.12 per share and has a dividend yield of 0.4%. Acadia Healthcare does not pay a dividend. Chemed pays out 24.9% of its earnings in the form of a dividend. Acadia Healthcare has raised its dividend for 9 consecutive years.

Profitability

This table compares Chemed and Acadia Healthcare’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chemed 8.49% 30.54% 15.74%
Acadia Healthcare 6.07% 8.57% 3.22%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Chemed and Acadia Healthcare, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chemed 0 2 1 0 2.33
Acadia Healthcare 0 6 7 0 2.54

Chemed currently has a consensus target price of $228.50, suggesting a potential downside of 13.48%. Acadia Healthcare has a consensus target price of $42.73, suggesting a potential upside of 24.28%. Given Acadia Healthcare’s stronger consensus rating and higher probable upside, analysts clearly believe Acadia Healthcare is more favorable than Chemed.

Summary

Chemed beats Acadia Healthcare on 10 of the 17 factors compared between the two stocks.

Chemed Company Profile

Chemed Corporation purchases, operates and divests subsidiaries engaged in various business activities. The Company operates through two segments: the VITAS segment (VITAS) and the Roto-Rooter segment (Roto-Rooter). The Company’s VITAS provides hospice and palliative care services to its patients through a network of physicians, registered nurses, home health aides, social workers, clergy and volunteers. VITAS is the provider of hospice services in an industry dominated primarily by small, non-profit, community-based hospices. VITAS provides hospice care to Medicare beneficiaries participating in these managed care programs. A portion of its VITAS business is operated in the state of Florida. The Roto-Rooter segment provides plumbing, drain cleaning, water restoration and other related services to both residential and commercial customers.

Acadia Healthcare Company Profile

Acadia Healthcare Company, Inc. is a provider of behavioral healthcare services, with operations in the United States and the United Kingdom. The Company focuses on acquiring and developing behavioral healthcare facilities. The Company operates through two segments: U.S. Facilities and U.K. Facilities. The Company is engaged in operating acute inpatient psychiatric facilities, specialty treatment facilities, residential treatment centers and facilities providing outpatient behavioral healthcare services. As of December 31, 2016, the U.S. Facilities segment included 208 behavioral healthcare facilities with approximately 8,500 beds in 39 states and Puerto Rico, and the U.K. Facilities segment included 365 behavioral healthcare facilities with approximately 8,600 beds in the United Kingdom. As of December 31, 2016, the Company had operated 573 behavioral healthcare facilities with approximately 17,100 beds in 39 states, the United Kingdom and Puerto Rico.

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