Comparing Acadia Healthcare (ACHC) & American Renal Associates (ARA)

Acadia Healthcare (NASDAQ: ACHC) and American Renal Associates (NYSE:ARA) are both healthcare companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Earnings and Valuation

This table compares Acadia Healthcare and American Renal Associates’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Acadia Healthcare $2.85 billion 1.10 $6.14 million $1.96 18.19
American Renal Associates $749.77 million 0.79 -$380,000.00 ($0.09) -208.78

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

Profitability

This table compares Acadia Healthcare and American Renal Associates’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Acadia Healthcare 6.07% 8.57% 3.22%
American Renal Associates -2.15% 15.80% 2.34%

Institutional & Insider Ownership

93.7% of American Renal Associates shares are held by institutional investors. 11.1% of Acadia Healthcare shares are held by insiders. Comparatively, 12.6% of American Renal Associates shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for Acadia Healthcare and American Renal Associates, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Acadia Healthcare 0 6 8 0 2.57
American Renal Associates 0 0 4 0 3.00

Acadia Healthcare currently has a consensus target price of $42.58, suggesting a potential upside of 19.41%. American Renal Associates has a consensus target price of $20.00, suggesting a potential upside of 6.44%. Given Acadia Healthcare’s higher probable upside, equities analysts clearly believe Acadia Healthcare is more favorable than American Renal Associates.

Summary

Acadia Healthcare beats American Renal Associates on 9 of the 13 factors compared between the two stocks.

About Acadia Healthcare

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.

About American Renal Associates

American Renal Associates Holdings, Inc. is a dialysis service provider in the United States focused on joint venture (JV) partnerships with physicians. As of December 31, 2016, the Company owned and operated 214 dialysis clinics in partnership with 379 nephrologist partners treating over 14,000 patients in 25 states and the District of Columbia. The Company operates its dialysis clinics exclusively through a JV model, in which it partners primarily with local nephrologists to develop, own and operate dialysis clinics, while the providers of the majority of dialysis services in the United States operate through a combination of subsidiaries and joint ventures. It provides patient care and clinical outcomes to patients suffering from end-stage renal disease (ESRD). Its clinics offer both in center and home dialysis options to meet the needs of patients. Its clinics primarily provide in center hemodialysis treatments and ancillary items and services.

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