Investors are evaluating the potential of two medical companies, Quest Diagnostics (NYSE:DGX) and U.S. Physical Therapy (NYSE:USPH), as they seek to determine which represents a superior investment opportunity. A comprehensive comparison of their financial health, market performance, and analyst recommendations reveals key insights into each company’s prospects.
Profitability and Financial Performance
A vital aspect of any investment decision is understanding profitability. Currently, Quest Diagnostics outperforms U.S. Physical Therapy in several important metrics, including net margins, return on equity, and return on assets. This suggests that Quest Diagnostics is not only generating more revenue but also converting that revenue into profit more effectively.
When analyzing insider and institutional ownership, it is noteworthy that approximately 88.1% of Quest Diagnostics shares are held by institutional investors, indicating strong confidence among large money managers. In contrast, only 2.0% of U.S. Physical Therapy shares are owned by insiders, which may suggest lower confidence in its long-term growth potential.
Dividends and Earnings
In terms of dividends, Quest Diagnostics pays an annual dividend of $3.20 per share, yielding 1.7%. The company has a strong track record, having increased its dividend for 14 consecutive years. On the other hand, U.S. Physical Therapy offers an annual dividend of $1.80 per share with a yield of 2.5%, but it distributes 75.6% of its earnings as dividends. This high payout ratio raises concerns about sustainability, as it suggests that the company may struggle to maintain its dividend in the future.
In contrast, Quest Diagnostics retains a payout ratio of 37.6%, allowing it more flexibility to reinvest in growth opportunities.
Market Valuation and Analyst Insights
Analyst ratings provide further clarity on the relative attractiveness of these investments. According to MarketBeat.com, Quest Diagnostics has a consensus target price of $196.31, which implies a modest potential upside of 2.73%. Conversely, U.S. Physical Therapy boasts a higher consensus target price of $110.25, suggesting a more substantial potential upside of 53.83%. This indicates that analysts favor U.S. Physical Therapy as a more favorable investment option based on its growth potential.
Despite this optimistic outlook, Quest Diagnostics outshines U.S. Physical Therapy in 12 out of 17 factors assessed during the comparison. This includes revenue and earnings per share, where Quest Diagnostics consistently reports higher figures.
Company Profiles
Founded in 1967 and headquartered in Secaucus, New Jersey, Quest Diagnostics provides a wide range of diagnostic testing services. The company operates both domestically and internationally, offering clinical testing and diagnostic information services under various brand names, including Quest Diagnostics, AmeriPath, and Dermpath Diagnostics. Quest Diagnostics serves a diverse clientele, including healthcare providers, government agencies, and insurance companies.
U.S. Physical Therapy, established in 1990 and based in Houston, Texas, focuses on outpatient physical therapy clinics. The company operates in two key segments: Physical Therapy Operations and Industrial Injury Prevention Services. U.S. Physical Therapy offers services such as pre-and post-operative care, treatment for orthopedic and sports-related injuries, and rehabilitation services.
As investors weigh their options, the choice between Quest Diagnostics and U.S. Physical Therapy will depend on their financial goals, risk tolerance, and investment strategies. While Quest Diagnostics demonstrates a stronger overall financial performance, U.S. Physical Therapy may appeal to those seeking higher growth potential.
