Critical Review: Advantage Solutions (NASDAQ:ADV) and MultiPlan (NYSE:MPLN)

MultiPlan (NYSE:MPLN) and Advantage Solutions (NASDAQ:ADV) are both small-cap medical companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, earnings, institutional ownership, analyst recommendations, risk and profitability.

Insider and Institutional Ownership

87.2% of MultiPlan shares are owned by institutional investors. Comparatively, 49.8% of Advantage Solutions shares are owned by institutional investors. 8.2% of MultiPlan shares are owned by insiders. Comparatively, 6.2% of Advantage Solutions shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for MultiPlan and Advantage Solutions, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MultiPlan	0	1	0	0	2.00
Advantage Solutions	0	2	2	0	2.50

MultiPlan currently has a consensus price target of $2.00, indicating a potential upside of 612.25%. Advantage Solutions has a consensus price target of $3.43, indicating a potential upside of 7.97%. Given MultiPlan’s higher possible upside, research analysts plainly believe MultiPlan is more favorable than Advantage Solutions.

Earnings and Valuation

This table compares MultiPlan and Advantage Solutions’ gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MultiPlan	$961.52 million	0.19	-$91.70 million	($0.98)	-0.29
Advantage Solutions	$4.22 billion	0.24	-$63.26 million	($0.07)	-45.42

Advantage Solutions has higher revenue and earnings than MultiPlan. Advantage Solutions is trading at a lower price-to-earnings ratio than MultiPlan, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

MultiPlan has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500. Comparatively, Advantage Solutions has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500.

Profitability

This table compares MultiPlan and Advantage Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MultiPlan	-65.83%	-8.11%	-1.89%
Advantage Solutions	-0.36%	-5.26%	-1.54%

Summary

Advantage Solutions beats MultiPlan on 10 of the 14 factors compared between the two stocks.

About MultiPlan

MultiPlan Corporation, together with its subsidiaries, provides data analytics and technology-enabled cost management, payment, and revenue integrity solutions to the healthcare industry in the United States. The company offers analytics-based services that reduce medical costs, through data-driven algorithms and insights that detect claims over-charges and negotiate or recommend reimbursement; and network-based services that provide contracted discounts with healthcare providers, as well as outsourced network development and management services. It provides payment and revenue integrity services, such as identifying and removing improper and unnecessary charges paid during the claim, as well as services to identify and help restore and preserve underpaid premium dollars. In addition, the company offers data and decision science services including a suite of solutions that apply modern methods of data science to produce descriptive, predictive, and prescriptive analytics that drive optimized benefit plan design, support decision-making, improve clinical outcomes, and reduce the total cost of care; and business-to-business healthcare payments and other services. It serves national and regional insurance companies, Blue Cross and Blue Shield plans, provider-sponsored and independent health plans, TPAs, self-insured health plans, property and casualty insurers, bill review companies, and other companies involved in the claim adjudication process. MultiPlan Corporation was founded in 1980 and is headquartered in New York, New York.

About Advantage Solutions

Advantage Solutions Inc. provides business solutions to consumer goods manufacturers and retailers in North America and internationally. It operates in two segments, Sales and Marketing. The Sales segment offers brand-centric services, such as headquarter relationship management; analytics, insights, and intelligence; and brand-centric merchandising services. This segment also provides retailer-centric services comprising retailer-centric merchandising and in-store media services. The Marketing segment offers brand-centric services, including shopper and consumer marketing, and brand experiential services; retailer-centric services, such as retail experiential and private label services; and digital marketing, and digital media and advertising services. The company was formerly known as Karman Holding Corp. and changed its name to Advantage Solutions Inc. in March 2016. The company was founded in 1987 and is headquartered in Irvine, California.