Sodexo (SDXAY) & Premier (PINC) Financial Review

Sodexo (OTCMKTS: SDXAY) and Premier (NASDAQ:PINC) are both business services companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Profitability

This table compares Sodexo and Premier’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sodexo N/A N/A N/A
Premier 14.14% -19.94% 10.66%

Dividends

Sodexo pays an annual dividend of $0.55 per share and has a dividend yield of 2.8%. Premier does not pay a dividend. Sodexo pays out 8.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Sodexo and Premier, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sodexo 0 3 2 0 2.40
Premier 0 6 8 0 2.57

Premier has a consensus price target of $37.05, suggesting a potential upside of 14.23%. Given Premier’s stronger consensus rating and higher probable upside, analysts clearly believe Premier is more favorable than Sodexo.

Insider & Institutional Ownership

0.1% of Sodexo shares are owned by institutional investors. Comparatively, 43.2% of Premier shares are owned by institutional investors. 1.0% of Sodexo shares are owned by insiders. Comparatively, 17.5% of Premier shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Sodexo has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, Premier has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500.

Earnings and Valuation

This table compares Sodexo and Premier’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sodexo $24.32 billion 0.61 $794.57 million $6.49 3.03
Premier $1.45 billion 3.03 $113.42 million $1.61 20.14

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

Summary

Premier beats Sodexo on 10 of the 16 factors compared between the two stocks.

About Sodexo

Sodexo S.A. develops, manages, and delivers on-site services, benefits and rewards services, and personal and home services worldwide. The company offers various on-site services, including construction, reception, medical equipment sterilization, cleaning, food, event management, and prisoner rehabilitation services to corporates, governments, healthcare and seniors, universities, schools, energy and resources, and sports and leisure customers. It also provides benefits and rewards services, which comprise employee benefits, incentive and recognition programs, expense management, public benefits, and gift cards and boxes. In addition, the company offers concierge services; and in-home care services comprising assistance with eating, bathing, walking, and housecleaning, as well as helps in maintaining social contact and relationships. Further, it provides grocery shopping, going to work, and a doctor's appointment services; and operates child day-care centers. The company was formerly known as Sodexho Alliance and changed its name to Sodexo S.A. in 2008. Sodexo S.A. was founded in 1966 and is headquartered in Issy-les-Moulineaux, France.

About Premier

Premier, Inc., together with its subsidiaries, operates as a healthcare improvement company in the United States. The company operates through two segments, Supply Chain Services and Performance Services. The Supply Chain Services segment offers its members with access to a range of products and services, including medical and surgical products, pharmaceuticals, laboratory supplies, capital equipment, information technology, facilities and construction, and food and nutritional products, as well as purchased services, such as clinical engineering and document shredding services and software-as-a-service informatics products. This segment also engages in the Integrated Pharmacy business, which provides traditional pharmacy dispensing and integrated pharmacy services; direct sourcing business; and provision of ASCEND Collaborative service for members to receive group purchasing programs, tiers, and prices, as well as managed services. The Performance Services segment offers PremierConnect for members to address existing cost and quality imperatives, help them manage a value-based care reimbursement model and support their regulatory reporting framework; and performance improvement collaborative, advisory, and government and insurance management services. This segment provides various PremierConnect domains comprising PremierConnect Quality & Regulatory domain for identifying and targeting quality improvement areas; PremierConnect Clinical Surveillance & Safety domain to enhance patient safety; PremierConnect Supply Chain & ERP domain for lowering supply chain costs; PremierConnect Operations domain, which optimizes labor management with integrated financial reporting and budgeting; and PremierConnect Enterprise Analytics, which integrates member's custom data into a hosted and integrated data warehouse and analytics platform. The company is headquartered in Charlotte, North Carolina.

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