Analyzing Psychemedics (PMD) and Quest Diagnostics (DGX)

Psychemedics (NASDAQ:PMD) and Quest Diagnostics (NYSE:DGX) are both medical companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, dividends, risk, analyst recommendations, valuation and institutional ownership.

Valuation and Earnings

This table compares Psychemedics and Quest Diagnostics’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Psychemedics $42.67 million 1.33 $4.58 million N/A N/A
Quest Diagnostics $7.53 billion 1.76 $736.00 million $6.31 15.64

Quest Diagnostics has higher revenue and earnings than Psychemedics.

Dividends

Psychemedics pays an annual dividend of $0.72 per share and has a dividend yield of 7.0%. Quest Diagnostics pays an annual dividend of $2.12 per share and has a dividend yield of 2.1%. Quest Diagnostics pays out 33.6% of its earnings in the form of a dividend. Quest Diagnostics has increased its dividend for 7 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Psychemedics and Quest Diagnostics, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Psychemedics 0 0 0 0 N/A
Quest Diagnostics 2 9 8 0 2.32

Quest Diagnostics has a consensus price target of $101.88, suggesting a potential upside of 3.26%. Given Quest Diagnostics’ higher probable upside, analysts plainly believe Quest Diagnostics is more favorable than Psychemedics.

Volatility & Risk

Psychemedics has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500. Comparatively, Quest Diagnostics has a beta of 0.92, indicating that its share price is 8% less volatile than the S&P 500.

Insider & Institutional Ownership

56.5% of Psychemedics shares are owned by institutional investors. Comparatively, 90.5% of Quest Diagnostics shares are owned by institutional investors. 11.2% of Psychemedics shares are owned by insiders. Comparatively, 1.9% of Quest Diagnostics shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Psychemedics and Quest Diagnostics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Psychemedics 9.53% 21.41% 15.24%
Quest Diagnostics 9.59% 14.99% 7.13%

Summary

Quest Diagnostics beats Psychemedics on 10 of the 15 factors compared between the two stocks.

Psychemedics Company Profile

Psychemedics Corporation provides testing services for the detection of drugs of abuse through the analysis of hair samples in the United States and internationally. The company's tests provide quantitative information that can indicate the approximate amount of drug ingested, as well as historical data, which can show a pattern of individual drug use over a longer period of time. It provides screening and confirmation by mass spectrometry using industry-accepted practices for cocaine, marijuana, PCP, amphetamines, synthetic cannabinoids, and benzodiazepines, as well as opiates, including heroin, hydrocodone, hydromorphone, oxycodone, oxymorphone, and codeine. The company offers its services to employers for applicant and employee testing; treatment professionals, law enforcement agencies, school administrators, and parents concerned about their children's drug use; and Fortune 500 companies and small to mid-size corporations, as well as school and government entities. Psychemedics Corporation was founded in 1985 and is headquartered in Acton, Massachusetts.

Quest Diagnostics Company Profile

Quest Diagnostics Incorporated provides diagnostic testing, information, and services in the United States and internationally. The company develops and delivers diagnostic testing information and services, such as routine testing, non-routine and advanced clinical testing, anatomic pathology testing, and other diagnostic information services. It offers diagnostic information services primarily under the Quest Diagnostics brand, as well as under the AmeriPath, Dermpath Diagnostics, Athena Diagnostics, ExamOne, and Quanum brands to patients, clinicians, hospitals, integrated delivery networks, health plans, employers, and accountable care organizations through a network of laboratories, patient service centers, phlebotomists in physician offices, call centers and mobile paramedics, nurses, and other health and wellness professionals. The company also offers risk assessment services for the life insurance industry; and health information technology solutions for healthcare organizations and clinicians. Quest Diagnostics Incorporated was founded in 1967 and is headquartered in Secaucus, New Jersey.

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