Analyzing UnitedHealth Group (NYSE:UNH) & Community Health Systems (NYSE:CYH)

UnitedHealth Group (NYSE:UNH) and Community Health Systems (NYSE:CYH) are both healthcare companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, earnings, valuation and risk.

Volatility & Risk

UnitedHealth Group has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, Community Health Systems has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500.

Profitability

This table compares UnitedHealth Group and Community Health Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UnitedHealth Group	3.53%	17.95%	5.95%
Community Health Systems	0.31%	-6.66%	-1.24%

Institutional & Insider Ownership

87.9% of UnitedHealth Group shares are held by institutional investors. Comparatively, 85.0% of Community Health Systems shares are held by institutional investors. 0.2% of UnitedHealth Group shares are held by company insiders. Comparatively, 11.1% of Community Health Systems shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for UnitedHealth Group and Community Health Systems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UnitedHealth Group	0	8	20	0	2.71
Community Health Systems	3	4	1	0	1.75

UnitedHealth Group presently has a consensus target price of $463.93, suggesting a potential upside of 14.08%. Community Health Systems has a consensus target price of $2.96, suggesting a potential upside of 22.75%. Given Community Health Systems’ higher possible upside, analysts clearly believe Community Health Systems is more favorable than UnitedHealth Group.

Earnings & Valuation

This table compares UnitedHealth Group and Community Health Systems”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
UnitedHealth Group	$447.57 billion	0.82	$12.06 billion	$17.51	23.23
Community Health Systems	$12.48 billion	0.03	$509.00 million	$0.26	9.27

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

Summary

UnitedHealth Group beats Community Health Systems on 11 of the 14 factors compared between the two stocks.

About UnitedHealth Group

UnitedHealth Group Incorporated operates as a diversified health care company in the United States. The company operates through four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. The UnitedHealthcare segment offers consumer-oriented health benefit plans and services for national employers, public sector employers, mid-sized employers, small businesses, and individuals; health care coverage, and health and well-being services to individuals age 50 and older addressing their needs; Medicaid plans, children's health insurance and health care programs; and health and dental benefits, and hospital and clinical services, as well as health care benefits products and services to state programs caring for the economically disadvantaged, medically underserved, and those without the benefit of employer-funded health care coverage. The Optum Health segment provides care delivery, care management, wellness and consumer engagement, and health financial services patients, consumers, care delivery systems, providers, employers, payers, and public-sector entities. The Optum Insight segment offers software and information products, advisory consulting arrangements, and managed services outsourcing contracts to hospital systems, physicians, health plans, governments, life sciences companies, and other organizations. The Optum Rx segment provides pharmacy care services and programs, including retail network contracting, home delivery, specialty and community health pharmacy services, infusion, and purchasing and clinical capabilities, as well as develops programs in the areas of step therapy, formulary management, drug adherence, and disease/drug therapy management. UnitedHealth Group Incorporated was founded in 1974 and is based in Minnetonka, Minnesota.

About Community Health Systems

Community Health Systems, Inc. owns, leases, and operates general acute care hospitals in the United States. It offers general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric, and rehabilitation services, as well as skilled nursing and home care services. The company also provides outpatient services at primary care practices, urgent care centers, free-standing emergency departments, ambulatory surgery centers, imaging and diagnostic centers, and direct-to-consumer virtual health visits. The company was incorporated in 1996 and is headquartered in Franklin, Tennessee.