Analyzing Quest Diagnostics (NYSE:DGX) & Psychemedics (PMD)

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

Institutional & Insider Ownership

92.2% of Quest Diagnostics shares are held by institutional investors. Comparatively, 55.1% of Psychemedics shares are held by institutional investors. 1.9% of Quest Diagnostics shares are held by insiders. Comparatively, 11.2% of Psychemedics shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Quest Diagnostics and Psychemedics, as provided by MarketBeat.com.

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

Quest Diagnostics currently has a consensus target price of $101.88, suggesting a potential upside of 4.78%. Given Quest Diagnostics’ higher possible upside, analysts clearly believe Quest Diagnostics is more favorable than Psychemedics.

Earnings and Valuation

This table compares Quest Diagnostics and Psychemedics’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Quest Diagnostics $7.53 billion 1.73 $736.00 million $6.31 15.41
Psychemedics $42.67 million 1.33 $4.58 million N/A N/A

Quest Diagnostics has higher revenue and earnings than Psychemedics.

Volatility and Risk

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

Dividends

Quest Diagnostics pays an annual dividend of $2.12 per share and has a dividend yield of 2.2%. Psychemedics pays an annual dividend of $0.72 per share and has a dividend yield of 7.0%. Quest Diagnostics pays out 33.6% of its earnings in the form of a dividend. Quest Diagnostics has raised its dividend for 7 consecutive years.

Profitability

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

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

Summary

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

About Quest Diagnostics

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.

About Psychemedics

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.

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