Diplomat Pharmacy (NYSE: DPLO) and Rite Aid (NYSE:RAD) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, valuation, profitability, analyst recommendations, risk, dividends and earnings.

Insider and Institutional Ownership

75.9% of Diplomat Pharmacy shares are owned by institutional investors. Comparatively, 50.6% of Rite Aid shares are owned by institutional investors. 24.7% of Diplomat Pharmacy shares are owned by insiders. Comparatively, 2.3% of Rite Aid shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for Diplomat Pharmacy and Rite Aid, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Diplomat Pharmacy 0 4 6 0 2.60
Rite Aid 2 5 1 0 1.88

Diplomat Pharmacy presently has a consensus price target of $27.22, indicating a potential upside of 0.90%. Rite Aid has a consensus price target of $2.31, indicating a potential upside of 30.30%. Given Rite Aid’s higher possible upside, analysts plainly believe Rite Aid is more favorable than Diplomat Pharmacy.

Profitability

This table compares Diplomat Pharmacy and Rite Aid’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Diplomat Pharmacy 0.23% 8.80% 4.07%
Rite Aid 3.60% -8.25% -0.71%

Volatility & Risk

Diplomat Pharmacy has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500. Comparatively, Rite Aid has a beta of 1.69, indicating that its stock price is 69% more volatile than the S&P 500.

Earnings & Valuation

This table compares Diplomat Pharmacy and Rite Aid’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Diplomat Pharmacy $4.49 billion 0.45 $15.51 million $0.84 32.12
Rite Aid $21.53 billion 0.09 $943.47 million ($0.02) -88.50

Rite Aid has higher revenue and earnings than Diplomat Pharmacy. Rite Aid is trading at a lower price-to-earnings ratio than Diplomat Pharmacy, indicating that it is currently the more affordable of the two stocks.

Summary

Diplomat Pharmacy beats Rite Aid on 9 of the 14 factors compared between the two stocks.

About Diplomat Pharmacy

Diplomat Pharmacy, Inc. operates as an independent specialty pharmacy in the United States. The company stocks, dispenses, and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. It also provides specialty infusion pharmacy, patient care coordination, clinical, compliance and persistency program, patient financial assistance, specialty pharmacy training/consulting, benefits investigation, prior authorization, risk evaluation and medication strategy, retail specialty, and hub services, as well as clinical and administrative support services to hospitals and health systems. The company's primary focus is on medication management programs for individuals with complex chronic diseases, including oncology, immunology, hepatitis, multiple sclerosis, specialized infusion therapy, and various other serious or long-term conditions. The company was founded in 1975 and is headquartered in Flint, Michigan.

About Rite Aid

Rite Aid Corporation, through its subsidiaries, operates a chain of retail drugstores in the United States. It operates through two segments, Retail Pharmacy and Pharmacy Services. The Retail Pharmacy segment sells prescription drugs and a range of other merchandise, including over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, food and beverages, greeting cards, seasonal merchandise, and other every day and convenience products. It also operates retail clinics that provide treatment for common conditions; and a range of preventive services comprising screenings, medical tests, immunizations, and basic physical exams. In addition, this segment offers healthcare coaching and disease management services. The Pharmacy Services segment provides pharmacy benefit management (PBM) services and a range of pharmacy-related services. This segment also performs prescription adjudication services for other PBMs; and offers integrated mail-order, specialty and compounding pharmacy, and infertility treatment services, as well as drug benefits under the federal government's Medicare Part D program. As of April 12, 2018, the company operated approximately 2,548 stores in 19 states. Rite Aid Corporation was founded in 1927 and is headquartered in Camp Hill, Pennsylvania.

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