Comparing Stocks: The Pennant Group vs. Quest Diagnostics

Investors are evaluating the performance and potential of two medical companies: The Pennant Group (NASDAQ:PNTG) and Quest Diagnostics (NYSE:DGX). This analysis contrasts the two firms based on various metrics, including analyst recommendations, valuation, dividends, risk, profitability, earnings, and institutional ownership.

Ownership and Institutional Confidence

Institutional investors hold a significant share in both companies, indicating confidence in their long-term growth. 85.9% of The Pennant Group’s shares are owned by institutional investors, while 88.1% of Quest Diagnostics shares are similarly held. In terms of insider ownership, 5.4% of The Pennant Group’s shares are owned by company insiders compared to 8.2% for Quest Diagnostics. High institutional ownership suggests that major money managers and hedge funds expect continued performance from these stocks.

Risk Assessment and Volatility

When assessing risk, The Pennant Group has a beta of 1.28, indicating its stock price is 28% more volatile than the broader market, represented by the S&P 500. In contrast, Quest Diagnostics has a beta of 0.64, showing that its stock price is 36% less volatile than the S&P 500. This implies that Quest Diagnostics may provide a more stable investment for risk-averse investors.

Profitability metrics further illustrate the differences between the two companies. The Pennant Group reports net margins of 3.15%, a return on equity of 9.37%, and a return on assets of 4.20%. Quest Diagnostics outperforms with net margins of 8.91%, a return on equity of 15.47%, and a return on assets of 6.84%.

Analyst Ratings and Earnings Potential

Analysts provide insights into future performance through ratings and target prices. According to MarketBeat.com, The Pennant Group currently holds a consensus target price of $36.20, suggesting a potential upside of 28.69%. Meanwhile, Quest Diagnostics has a target price of $197.27, indicating a potential upside of 12.99%. Despite Quest Diagnostics having a higher absolute target price, The Pennant Group’s stronger consensus rating and greater upside potential may appeal to certain investors.

Revenue and earnings figures confirm Quest Diagnostics’ larger market presence. The company reported gross revenue of $9.87 billion and a net income of $871 million, along with earnings per share of $8.52. In comparison, The Pennant Group’s gross revenue stands at $695.24 million, with a net income of $22.56 million and earnings per share of $0.75. The price-to-earnings ratios reveal that Quest Diagnostics, at 20.49, is trading at a lower multiple than The Pennant Group’s 37.51, suggesting that it may be the more reasonably priced stock.

In summary, while Quest Diagnostics outperforms The Pennant Group in several key areas, including revenue and profitability, the latter shows promise with a higher potential upside and a favorable consensus rating from analysts. Investors will need to weigh these factors based on their individual risk tolerance and investment strategies.

Company Overviews

The Pennant Group, Inc., headquartered in Eagle, Idaho, provides healthcare services across the United States. The company operates in two primary segments: Home Health and Hospice Services and Senior Living Services. Its offerings include nursing, therapy, and home health aide services, as well as care and support for seniors.

Conversely, Quest Diagnostics Incorporated, based in Secaucus, New Jersey, specializes in diagnostic testing and related services. Founded in 1967, Quest delivers a wide range of clinical testing services and healthcare IT solutions, primarily under its brand but also through several subsidiaries.

As investors consider their options, the distinct profiles and performances of The Pennant Group and Quest Diagnostics will likely influence investment decisions in the healthcare sector.