Critical Review: CVS Health (NYSE:CVS) vs. CochLear (OTCMKTS:CHEOY)

CochLear (OTCMKTS:CHEOY) and CVS Health (NYSE:CVS) are both large-cap medical companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, dividends, valuation, profitability, risk, earnings and institutional ownership.

Valuation & Earnings

This table compares CochLear and CVS Health”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CochLear	$1.53 billion	7.72	$251.85 million	N/A	N/A
CVS Health	$372.81 billion	0.27	$4.61 billion	$0.38	206.26

CVS Health has higher revenue and earnings than CochLear.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
CochLear	N/A	N/A	N/A
CVS Health	0.12%	11.45%	3.40%

Volatility & Risk

CochLear has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500. Comparatively, CVS Health has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for CochLear and CVS Health, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CochLear	0	2	1	2	3.00
CVS Health	0	4	19	0	2.83

CVS Health has a consensus target price of $94.82, suggesting a potential upside of 20.97%. Given CVS Health’s higher possible upside, analysts clearly believe CVS Health is more favorable than CochLear.

Insider and Institutional Ownership

80.7% of CVS Health shares are held by institutional investors. 1.2% of CVS Health shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

CochLear pays an annual dividend of $1.24 per share and has a dividend yield of 1.4%. CVS Health pays an annual dividend of $2.66 per share and has a dividend yield of 3.4%. CVS Health pays out 700.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CVS Health has raised its dividend for 4 consecutive years. CVS Health is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

CVS Health beats CochLear on 11 of the 16 factors compared between the two stocks.

About CochLear

Cochlear Limited provides implantable hearing solutions for children and adults worldwide. It offers cochlear implant systems, sound processor upgrades, bone conduction systems, accessories, and other products. Cochlear Limited was founded in 1981 and is headquartered in Sydney, Australia.

About CVS Health

CVS Health Corporation provides health solutions in the United States. It operates through Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness segments. The Health Care Benefits segment offers traditional, voluntary, and consumer-directed health insurance products and related services. It serves employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups, and expatriates. The Health Services segment offers pharmacy benefit management solutions, including plan design and administration, formulary management, retail pharmacy network management, specialty and mail order pharmacy, clinical, disease management, and medical spend management services. It serves employers, insurance companies, unions, government employee groups, health plans, prescription drug plans, Medicaid managed care plans, CMS, plans offered on public health insurance, and other sponsors of health benefit plans. The Pharmacy & Consumer Wellness segment sells prescription and over-the-counter drugs, consumer health and beauty products, and personal care products. This segment also distributes prescription drugs; and provides related pharmacy consulting and other ancillary services to care facilities and other care settings. It operates online retail pharmacy websites, LTC pharmacies and on-site pharmacies, retail specialty pharmacy stores, compounding pharmacies and branches for infusion and enteral nutrition services. The company was formerly known as CVS Caremark Corporation and changed its name to CVS Health Corporation in September 2014. CVS Health Corporation was incorporated in 1996 and is headquartered in Woonsocket, Rhode Island.