HMS (HMSY) and The Providence Service (PRSC) Head-To-Head Analysis

HMS (NASDAQ: HMSY) and The Providence Service (NASDAQ:PRSC) are both small-cap medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Earnings & Valuation

This table compares HMS and The Providence Service’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HMS $496.01 million 2.95 $37.63 million $0.29 59.93
The Providence Service $1.58 billion 0.52 $91.92 million $5.58 11.15

The Providence Service has higher revenue and earnings than HMS. The Providence Service is trading at a lower price-to-earnings ratio than HMS, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

95.9% of HMS shares are owned by institutional investors. Comparatively, 95.3% of The Providence Service shares are owned by institutional investors. 3.2% of HMS shares are owned by company insiders. Comparatively, 18.9% of The Providence Service shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations and price targets for HMS and The Providence Service, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HMS 0 4 4 1 2.67
The Providence Service 0 1 1 0 2.50

HMS currently has a consensus target price of $20.19, suggesting a potential upside of 16.15%. The Providence Service has a consensus target price of $67.00, suggesting a potential upside of 7.70%. Given HMS’s stronger consensus rating and higher possible upside, analysts plainly believe HMS is more favorable than The Providence Service.

Profitability

This table compares HMS and The Providence Service’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HMS 4.94% 7.93% 4.93%
The Providence Service 4.91% 6.29% 2.63%

Risk & Volatility

HMS has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500. Comparatively, The Providence Service has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.

Summary

HMS beats The Providence Service on 10 of the 15 factors compared between the two stocks.

About HMS

HMS Holdings Corp. is a holding company. The Company, through its subsidiaries, operates in the United States healthcare insurance benefit cost containment marketplace. It provides coordination of benefits services to government, and private healthcare payers and sponsors. Its payment integrity services ensure that healthcare claims billed are accurate and appropriate. It offers services to state Medicaid agencies, government health agencies and health plans, including Medicaid managed care, Medicare Advantage and group and individual health lines of business; government and private employers; and other healthcare payers and sponsors, including child support agencies. It serves approximately 45 state Medicaid programs and the District of Columbia, and government health agencies, including Centers for Medicare & Medicaid Services (CMS) and the Veterans Health Administration (VHA). It also provides services to approximately 250 health plans and supports their multiple lines of business.

About The Providence Service

The Providence Service Corporation (Providence) is a holding company. The Company, through its subsidiaries, is engaged in the provision of healthcare and workforce development services for public and private sector entities. The Company’s segments include Non-Emergency Transportation Services (NET Services), Workforce Development Services (WD Services) and Matrix Investment. NET Services segment includes nationwide provider of non-emergency medical transportation programs for state governments and managed care organizations. WD Services segment is a global provider of employment preparation and placement and legal offender rehabilitation services to eligible participants of government sponsored programs. Matrix Investment segment includes minority interest in nationwide provider of in-home care optimization and management solutions, including comprehensive health assessments (CHAs), to members of managed care organizations, accounted for as an equity method investment.

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