Fresenius Medical Care AG & Co. (FMS) and HMS (HMSY) Critical Analysis

HMS (NASDAQ: HMSY) and Fresenius Medical Care AG & Co. (NYSE:FMS) are both healthcare companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, dividends, risk, institutional ownership, earnings, analyst recommendations and profitability.

Volatility and Risk

HMS has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500. Comparatively, Fresenius Medical Care AG & Co. has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Profitability

This table compares HMS and Fresenius Medical Care AG & Co.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HMS 4.94% 7.93% 4.93%
Fresenius Medical Care AG & Co. 7.04% 11.51% 5.00%

Earnings and Valuation

This table compares HMS and Fresenius Medical Care AG & Co.’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HMS $496.01 million 3.02 $37.63 million $0.29 61.48
Fresenius Medical Care AG & Co. $17.91 billion 1.87 $1.24 billion $2.45 22.26

Fresenius Medical Care AG & Co. has higher revenue and earnings than HMS. Fresenius Medical Care AG & Co. is trading at a lower price-to-earnings ratio than HMS, indicating that it is currently the more affordable of the two stocks.

Dividends

Fresenius Medical Care AG & Co. pays an annual dividend of $0.37 per share and has a dividend yield of 0.7%. HMS does not pay a dividend. Fresenius Medical Care AG & Co. pays out 15.1% of its earnings in the form of a dividend. Fresenius Medical Care AG & Co. has increased its dividend for 2 consecutive years.

Insider and Institutional Ownership

95.9% of HMS shares are held by institutional investors. Comparatively, 3.0% of Fresenius Medical Care AG & Co. shares are held by institutional investors. 3.2% of HMS shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings for HMS and Fresenius Medical Care AG & Co., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HMS 0 4 4 1 2.67
Fresenius Medical Care AG & Co. 0 3 4 0 2.57

HMS currently has a consensus price target of $20.19, indicating a potential upside of 13.22%. Fresenius Medical Care AG & Co. has a consensus price target of $53.00, indicating a potential downside of 2.81%. Given HMS’s stronger consensus rating and higher probable upside, analysts plainly believe HMS is more favorable than Fresenius Medical Care AG & Co..

Summary

HMS beats Fresenius Medical Care AG & Co. on 9 of the 17 factors compared between the two stocks.

About HMS

HMS Holdings Corp. is a holding company. The Company, through its subsidiaries, operates in the United States healthcare insurance benefit cost containment marketplace. It provides coordination of benefits services to government, and private healthcare payers and sponsors. Its payment integrity services ensure that healthcare claims billed are accurate and appropriate. It offers services to state Medicaid agencies, government health agencies and health plans, including Medicaid managed care, Medicare Advantage and group and individual health lines of business; government and private employers; and other healthcare payers and sponsors, including child support agencies. It serves approximately 45 state Medicaid programs and the District of Columbia, and government health agencies, including Centers for Medicare & Medicaid Services (CMS) and the Veterans Health Administration (VHA). It also provides services to approximately 250 health plans and supports their multiple lines of business.

About Fresenius Medical Care AG & Co.

Fresenius Medical Care AG & Co. KGaA is a kidney dialysis company. The Company provides dialysis care and related services to persons suffering from end-stage renal disease (ESRD), as well as other healthcare services. The Company’s segments include North America Segment, the Europe, Middle East and Africa (EMEA) Segment, the Asia-Pacific Segment and the Latin America Segment. The Company develops and manufactures a range of dialysis machines, systems and disposable products. As of December 31, 2016, the Company sold its products to customers in more than 120 countries and also used in its internal healthcare service operations. The Company’s Care Coordination services include coordinated delivery of pharmacy services, vascular, cardiovascular and endovascular specialty services, non-dialysis laboratory testing services, physician services, hospitalist and intensivist services, health plan services, ambulatory surgery center services and urgent care services.

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