Head to Head Contrast: Magellan Health (MGLN) versus WellCare Health Plans (WCG)

Magellan Health (NASDAQ: MGLN) and WellCare Health Plans (NYSE:WCG) are both medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, analyst recommendations, valuation and risk.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Magellan Health and WellCare Health Plans, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Magellan Health 1 0 3 0 2.50
WellCare Health Plans 0 9 4 0 2.31

Magellan Health currently has a consensus price target of $80.25, suggesting a potential downside of 2.07%. WellCare Health Plans has a consensus price target of $172.18, suggesting a potential downside of 0.01%. Given WellCare Health Plans’ higher possible upside, analysts plainly believe WellCare Health Plans is more favorable than Magellan Health.

Insider & Institutional Ownership

93.5% of Magellan Health shares are held by institutional investors. Comparatively, 97.8% of WellCare Health Plans shares are held by institutional investors. 3.6% of Magellan Health shares are held by insiders. Comparatively, 0.5% of WellCare Health Plans shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Magellan Health has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500. Comparatively, WellCare Health Plans has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500.

Earnings and Valuation

This table compares Magellan Health and WellCare Health Plans’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Magellan Health $5.28 billion 0.37 $242.58 million $3.53 23.22
WellCare Health Plans $15.36 billion 0.50 $623.20 million $5.69 30.26

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

Profitability

This table compares Magellan Health and WellCare Health Plans’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Magellan Health 1.59% 8.88% 4.08%
WellCare Health Plans 1.66% 14.91% 4.12%

Summary

WellCare Health Plans beats Magellan Health on 11 of the 14 factors compared between the two stocks.

About Magellan Health

Magellan Health, Inc. is engaged in the healthcare management business. The Company’s segments include Healthcare, Pharmacy Management and Corporate. It is focused on managing special populations, complete pharmacy benefits and other specialty areas of healthcare. Its Healthcare includes its management of behavioral healthcare services and employee assistance program (EAP) services, management of other specialty areas, including diagnostic imaging and musculoskeletal management, and the integrated management of physical, behavioral and pharmaceutical healthcare for special populations, delivered through Magellan Complete Care (MCC). Its Pharmacy Management segment consists of products and solutions that provide clinical and financial management of pharmaceuticals paid under medical and pharmacy benefit programs. Its Corporate segment consists primarily of operational support functions. It provides services to health plans and other managed care organizations (MCOs).

About WellCare Health Plans

WellCare Health Plans, Inc. is a managed care company. The Company focuses on government-sponsored managed care services, primarily through Medicaid, Medicare Advantage (MA) and Medicare Prescription Drug Plans (PDPs), to families, children, seniors and individuals with medical needs. The Company operates through three segments: Medicaid Health Plans, Medicare Health Plans and Medicare PDPs. As of December 31, 2016, it served approximately 3.9 million members in 50 states and the District of Columbia. As of December 31, 2016, it operated Medicaid health plans in Arizona, Florida, Georgia, Hawaii, Illinois, Kentucky, Missouri, New Jersey, New York and South Carolina. As of December 31, 2016, it offered MA coordinated care plans (CCPs) in certain counties in Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Mississippi, New Jersey, New York, South Carolina, Tennessee and Texas.

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