Reviewing CVS Health (CVS) & Express Scripts (ESRX)

CVS Health (NYSE: CVS) and Express Scripts (NASDAQ:ESRX) are both large-cap retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, risk, valuation and analyst recommendations.

Analyst Recommendations

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This is a breakdown of recent ratings and target prices for CVS Health and Express Scripts, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CVS Health 0 6 12 2 2.80
Express Scripts 3 11 5 0 2.11

CVS Health presently has a consensus target price of $87.24, indicating a potential upside of 33.96%. Express Scripts has a consensus target price of $81.82, indicating a potential upside of 11.34%. Given CVS Health’s stronger consensus rating and higher probable upside, research analysts clearly believe CVS Health is more favorable than Express Scripts.

Dividends

CVS Health pays an annual dividend of $2.00 per share and has a dividend yield of 3.1%. Express Scripts does not pay a dividend. CVS Health pays out 33.9% of its earnings in the form of a dividend. CVS Health has raised its dividend for 10 consecutive years.

Earnings and Valuation

This table compares CVS Health and Express Scripts’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CVS Health $184.77 billion 0.36 $6.62 billion $5.90 11.04
Express Scripts $100.06 billion 0.41 $4.52 billion $7.10 10.35

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

Profitability

This table compares CVS Health and Express Scripts’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CVS Health 3.58% 17.21% 6.48%
Express Scripts 4.51% 25.19% 8.00%

Risk & Volatility

CVS Health has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500. Comparatively, Express Scripts has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500.

Insider & Institutional Ownership

84.0% of CVS Health shares are held by institutional investors. Comparatively, 89.3% of Express Scripts shares are held by institutional investors. 0.6% of CVS Health shares are held by insiders. Comparatively, 0.8% of Express Scripts shares are held by 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.

Summary

CVS Health beats Express Scripts on 10 of the 18 factors compared between the two stocks.

About CVS Health

CVS Health Corporation, together with its subsidiaries, provides integrated pharmacy health care services. It operates through Pharmacy Services and Retail/LTC segments. The Pharmacy Services segment offers pharmacy benefit management solutions, such as plan design and administration, formulary management, Medicare Part D services, mail order, specialty pharmacy and infusion services, retail pharmacy network management services, prescription management systems, clinical services, disease management programs, and medical pharmacy management services. This segment serves employers, insurance companies, unions, government employee groups, health plans, Medicare Part D plans, managed Medicaid plans, plans offered on public and private exchanges, other sponsors of health benefit plans, and individuals under the CVS Caremark Pharmacy Services, Caremark, CVS Specialty, AccordantCare, SilverScript, Wellpartner, NovoLogix, Coram, Navarro Health Services, and ACS Pharmacy names. As of December 31, 2017, it had 23 retail specialty pharmacy stores, 18 specialty mail order pharmacies and 4 mail order dispensing pharmacies, and 83 branches for infusion and enteral services. The Retail/LTC segment sells prescription drugs, over-the-counter drugs, beauty products and cosmetics, personal care products, convenience foods, seasonal merchandise, and greeting cards, as well as offers photo finishing services. It has 9,803 retail stores in 49 states, the District of Columbia, Puerto Rico, and Brazil primarily under the CVS Pharmacy, CVS, CVS Pharmacy y más, Longs Drugs, Navarro Discount Pharmacy, and Drogaria Onofre names; online retail pharmacy Websites; and 37 onsite pharmacy stores, long-term care pharmacy operations, and retail health care clinics. The company was formerly known as CVS Caremark Corporation and changed its name to CVS Health Corporation in September 2014. CVS Health Corporation was founded in 1892 and is headquartered in Woonsocket, Rhode Island.

About Express Scripts

Express Scripts Holding Company operates as a pharmacy benefit management (PBM) company in the United States and Canada. The company's PBM segment offers clinical solutions; and specialized pharmacy care, home delivery and specialty pharmacy, retail network pharmacy administration, benefit design consultation, drug utilization review, drug formulary management, public exchange, administration of group purchasing organization, and digital consumer health and drug information services. This segment also provides Medicare, Medicaid, and health insurance marketplace products; Express Scripts SafeGuardRx, a suite of solutions targeting the therapy classes that pose clinical challenges and budgetary threat to its clients; and Inside Rx, a program that provide affordable access to medication for uninsured and underinsured individuals. Its Other Business Operations segment distributes specialty pharmaceuticals and medical supplies, including injectable and infusible pharmaceuticals and medications to treat specialty and rare/orphan diseases. This segment also provides medical benefit management solutions for radiology, cardiology, musculoskeletal disorders, sleep disorders, post-acute care, genetic lab, specialty pharmacy, and medical oncology. The company serves managed care organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers' compensation plans, government health programs, providers, clinics, hospitals, and others. As of December 31, 2017, it operated 4 automated dispensing home delivery pharmacies; 1 non-automated dispensing home delivery pharmacy; 7 non-dispensing order processing centers; 5 patient contact centers; 9 specialty home delivery pharmacies; and 34 specialty branch pharmacies. The company was formerly known as Aristotle Holding, Inc. and changed its name to Express Scripts Holding Company in April 2012. Express Scripts Holding Company was founded in 1986 and is headquartered in Saint Louis, Missouri.

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