Psychemedics (PMD) & Laboratory Corp. of America (LH) Critical Analysis

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Psychemedics (NASDAQ:PMD) and Laboratory Corp. of America (NYSE:LH) are both medical companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings and price targets for Psychemedics and Laboratory Corp. of America, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Psychemedics 0 0 0 0 N/A
Laboratory Corp. of America 1 7 9 0 2.47

Laboratory Corp. of America has a consensus price target of $178.27, suggesting a potential upside of 23.55%. Given Laboratory Corp. of America’s higher possible upside, analysts plainly believe Laboratory Corp. of America is more favorable than Psychemedics.

Volatility and Risk

Psychemedics has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500. Comparatively, Laboratory Corp. of America has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Dividends

Psychemedics pays an annual dividend of $0.72 per share and has a dividend yield of 3.8%. Laboratory Corp. of America does not pay a dividend.

Valuation & Earnings

This table compares Psychemedics and Laboratory Corp. of America’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Psychemedics $39.70 million 2.64 $6.12 million N/A N/A
Laboratory Corp. of America $11.33 billion 1.28 $883.70 million $11.02 13.09

Laboratory Corp. of America has higher revenue and earnings than Psychemedics.

Institutional & Insider Ownership

55.7% of Psychemedics shares are owned by institutional investors. Comparatively, 92.0% of Laboratory Corp. of America shares are owned by institutional investors. 9.9% of Psychemedics shares are owned by company insiders. Comparatively, 0.7% of Laboratory Corp. of America shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Psychemedics and Laboratory Corp. of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Psychemedics 14.24% 26.58% 18.41%
Laboratory Corp. of America 8.43% 17.05% 7.28%

Summary

Psychemedics beats Laboratory Corp. of America on 7 of the 13 factors compared between the two stocks.

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.

About Laboratory Corp. of America

Laboratory Corporation of America Holdings operates as an independent clinical laboratory company worldwide. It operates through two segments, LabCorp Diagnostics and Covance Drug Development. It offers a range of clinical laboratory tests, such as blood chemistry analyses, urinalyses, blood cell counts, thyroid tests, Pap tests, hemoglobin A1C, prostate-specific antigen, tests for sexually-transmitted diseases, hepatitis C tests, vitamin D, microbiology cultures and procedures, and alcohol and other substance-abuse tests that are used by hospitals, physicians and other healthcare providers and commercial clients to assist in the diagnosis, monitoring and treatment of diseases and medical conditions through the examination of substances in blood, tissues, and other specimens. The company also provides specialty testing services in the areas of women's health, allergy, diagnostic genetics, cardiovascular disease, infectious disease, endocrinology, oncology, coagulation, pharmacogenetics, toxicology, medical drug monitoring, and pain management; and esoteric testing, cancer diagnostics, and other complex procedures. In addition, it provides drug development solutions and laboratory testing services; and testing services through a sales force to the managed care organizations, biopharmaceutical companies, governmental agencies, physicians and other healthcare providers, hospitals and health systems, employers, patients and consumers, contract research organizations, food and nutritional companies, and independent clinical laboratories. The company has collaboration with university, hospital and academic institutions, such as Boston University, Columbia University, Duke University, Johns Hopkins University, The Mount Sinai Hospital, the University of Tennessee, and Yale University to license and commercialize new diagnostic tests, as well as with Baptist Health. The company was founded in 1971 and is headquartered in Burlington, North Carolina.

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