Pharmerica Corporation (NYSE:PMC) vs. CVS Health Corporation (CVS) Critical Contrast

CVS Health Corporation (NYSE: CVS) and Pharmerica Corporation (NYSE:PMC) are both retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their profitabiliy, valuation, risk, analyst recommendations, institutional ownership, earnings and dividends.

Valuation & Earnings

This table compares CVS Health Corporation and Pharmerica Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CVS Health Corporation $178.83 billion 0.44 $12.81 billion $4.80 16.24
Pharmerica Corporation $2.21 billion 0.41 $137.50 million $0.74 39.12

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

Dividends

CVS Health Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.6%. Pharmerica Corporation does not pay a dividend. CVS Health Corporation pays out 41.7% of its earnings in the form of a dividend. Pharmerica Corporation has increased its dividend for 9 consecutive years.

Risk and Volatility

CVS Health Corporation has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500. Comparatively, Pharmerica Corporation has a beta of 0.92, indicating that its share price is 8% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for CVS Health Corporation and Pharmerica Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CVS Health Corporation 0 7 11 0 2.61
Pharmerica Corporation 1 1 1 0 2.00

CVS Health Corporation presently has a consensus price target of $92.67, suggesting a potential upside of 18.85%. Pharmerica Corporation has a consensus price target of $19.20, suggesting a potential downside of 33.68%. Given CVS Health Corporation’s stronger consensus rating and higher probable upside, equities research analysts plainly believe CVS Health Corporation is more favorable than Pharmerica Corporation.

Insider & Institutional Ownership

82.1% of CVS Health Corporation shares are owned by institutional investors. Comparatively, 92.8% of Pharmerica Corporation shares are owned by institutional investors. 0.6% of CVS Health Corporation shares are owned by company insiders. Comparatively, 5.0% of Pharmerica Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares CVS Health Corporation and Pharmerica Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CVS Health Corporation 2.86% 17.56% 6.64%
Pharmerica Corporation 1.05% 10.94% 4.84%

Summary

CVS Health Corporation beats Pharmerica Corporation on 11 of the 17 factors compared between the two stocks.

CVS Health Corporation Company Profile

CVS Health Corporation, together with its subsidiaries, is an integrated pharmacy healthcare company. The Company provides pharmacy care for the senior community through Omnicare, Inc. (Omnicare) and Omnicare’s long-term care (LTC) operations, which include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. It operates through three segments: Pharmacy Services, Retail/LTC and Corporate. The Pharmacy Services Segment provides a range of pharmacy benefit management (PBM) solutions to its clients. As of December 31, 2016, the Retail/LTC Segment included 9,709 retail locations (of which 7,980 were its stores that operated a pharmacy and 1,674 were its pharmacies located within Target Corporation (Target) stores), its online retail pharmacy Websites, CVS.com, Navarro.com and Onofre.com.br, 38 onsite pharmacy stores, its long-term care pharmacy operations and its retail healthcare clinics.

Pharmerica Corporation Company Profile

PharMerica Corporation is an institutional pharmacy services company. The Company services healthcare facilities, provides pharmacy management services to hospitals and specialty infusion services to patients outside a hospital setting, and offers the national oncology pharmacy in the United States. Its segments include institutional pharmacy, which provides pharmacy products and services to residents and patients in skilled nursing facilities, nursing centers, assisted living facilities, hospitals and other long-term alternative care settings; specialty infusion services, which provides specialty infusion services focused on providing pharmaceutical products and clinical services to patients in client facilities, hospice and outside of hospital or nursing home settings, and specialty oncology pharmacy, which provides dispensing of oncology drugs, care management and other related services to patients, oncology practices and hospitals.

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