Sotera Health (NASDAQ:SHC) and CVS Health (NYSE:CVS) Critical Analysis

CVS Health (NYSE:CVS) and Sotera Health (NASDAQ:SHC) are both medical companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, analyst recommendations, risk, dividends and valuation.

Insider & Institutional Ownership

80.7% of CVS Health shares are owned by institutional investors. Comparatively, 91.0% of Sotera Health shares are owned by institutional investors. 1.2% of CVS Health shares are owned by company insiders. Comparatively, 47.5% of Sotera Health shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

CVS Health has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500. Comparatively, Sotera Health has a beta of 1.84, meaning that its stock price is 84% more volatile than the S&P 500.

Profitability

This table compares CVS Health and Sotera Health’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CVS Health	0.44%	11.31%	3.35%
Sotera Health	6.70%	42.38%	6.91%

Earnings & Valuation

This table compares CVS Health and Sotera Health”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CVS Health	$402.07 billion	0.25	$1.77 billion	$1.38	56.75
Sotera Health	$1.16 billion	3.60	$77.94 million	$0.27	54.52

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

Analyst Ratings

This is a summary of current ratings and target prices for CVS Health and Sotera Health, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CVS Health	0	4	19	0	2.83
Sotera Health	0	3	8	0	2.73

CVS Health presently has a consensus target price of $94.91, suggesting a potential upside of 21.20%. Sotera Health has a consensus target price of $20.43, suggesting a potential upside of 38.78%. Given Sotera Health’s higher possible upside, analysts plainly believe Sotera Health is more favorable than CVS Health.

Summary

Sotera Health beats CVS Health on 8 of the 14 factors compared between the two stocks.

About CVS Health

CVS Health Corporation provides health solutions in the United States. It operates through Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness segments. The Health Care Benefits segment offers traditional, voluntary, and consumer-directed health insurance products and related services. It serves employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups, and expatriates. The Health Services segment offers pharmacy benefit management solutions, including plan design and administration, formulary management, retail pharmacy network management, specialty and mail order pharmacy, clinical, disease management, and medical spend management services. It serves employers, insurance companies, unions, government employee groups, health plans, prescription drug plans, Medicaid managed care plans, CMS, plans offered on public health insurance, and other sponsors of health benefit plans. The Pharmacy & Consumer Wellness segment sells prescription and over-the-counter drugs, consumer health and beauty products, and personal care products. This segment also distributes prescription drugs; and provides related pharmacy consulting and other ancillary services to care facilities and other care settings. It operates online retail pharmacy websites, LTC pharmacies and on-site pharmacies, retail specialty pharmacy stores, compounding pharmacies and branches for infusion and enteral nutrition services. The company was formerly known as CVS Caremark Corporation and changed its name to CVS Health Corporation in September 2014. CVS Health Corporation was incorporated in 1996 and is headquartered in Woonsocket, Rhode Island.

About Sotera Health

Sotera Health Company engages in the provision of sterilization, lab testing, and advisory services in the United States and internationally. The company operates through three segments: Sterigenics, Nordion, and Nelson Labs. It provides mission-critical end-to-end sterilization services, including gamma and electron beam irradiation, and ethylene oxide processing, as well as designs, installs, and maintains gamma irradiation systems. The company also provides microbiological and analytical chemistry testing, as well as technical assistance, regulatory consulting, and advisory services. It serves medical devices, pharmaceuticals, food safety, agricultural products, cancer treatment, and high-performance materials industries, as well as commercial, advanced, and specialty application industries. The company was formerly known as Sotera Health Topco, Inc. and changed its name to Sotera Health Company in October 2020. Sotera Health Company was incorporated in 2015 and is headquartered in Broadview Heights, Ohio.