Encompass Health
EHC
$111.02
+0.70%
Encompass Health Corporation is a leading provider of post-acute healthcare services in the United States, operating a nationwide network of inpatient rehabilitation hospitals that specialize in treating patients recovering from strokes, neurological disorders, orthopedic conditions, and other complex medical events. As the largest owner and operator of inpatient rehabilitation hospitals in the U.S., the company holds a dominant market position in a niche segment of the healthcare industry. The current investor narrative centers on the company's consistent revenue growth driven by an aging population and increasing demand for rehabilitative care, balanced against margin pressures from labor costs and regulatory changes. Recent news highlights the company's continued commitment to shareholder returns through regular dividend declarations, underscoring its financial stability.…
EHC
Encompass Health
$111.02
Related headlines
EHC 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Encompass Health's 12-month outlook, with a consensus price target around $144.33 and implied upside of +30.0% versus the current price.
Average Target
$144.33
2 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
2
covering this stock
Price Range
$89 - $144
Analyst target range
Analyst coverage is limited, with only 2 analysts providing estimates. The consensus recommendation is bullish, with all recent ratings being Overweight or Buy from firms like Barclays, UBS, KeyBanc, and B of A Securities. The average estimated EPS is $9.18, and the average estimated revenue is $8,934.7 million. Based on the current price of $106.46 and the forward P/E of 16.28x, the implied target price is approximately $149.45 (16.28 * $9.18), suggesting an upside of about 40%. However, this is a rough calculation; actual analyst targets are not provided. The estimated EPS range is $9.14 to $9.22, and revenue range is $8,904 million to $8,968 million, indicating tight consensus and low uncertainty. The limited analyst coverage is typical for a mid-cap stock, which can lead to higher volatility and less efficient price discovery, but the consistent Buy ratings from multiple firms suggest strong institutional confidence in the company's prospects.
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EHC Technical Analysis
Encompass Health is in a sustained downtrend over the past year, with a 1-year price change of -10.45%, significantly underperforming the S&P 500's +19.1% gain. The stock currently trades at $106.46, which is 83.2% of its 52-week range (low $92.77, high $127.99), positioning it closer to the lower end of the range. This suggests the stock is in a recovery phase from its lows but still well below its highs, indicating potential value but also lingering bearish sentiment. The 1-month price change of +4.84% and 3-month change of +9.31% show positive short-term momentum, contrasting with the negative 1-year trend. This divergence could signal a potential trend reversal or a temporary bounce within a larger downtrend. The stock's relative strength versus the S&P 500 over 1 month is +6.09%, indicating recent outperformance, but the 3-month relative strength is -4.25%, suggesting the longer-term underperformance persists. The stock's beta of 0.602 indicates it is less volatile than the market, which may appeal to risk-averse investors. The 52-week low of $92.77 provides a key support level, while the 52-week high of $127.99 acts as resistance. A breakout above $127.99 would signal a strong reversal, while a breakdown below $92.77 could indicate further downside. The low beta suggests the stock may not participate fully in market rallies but also offers downside protection.
Beta
0.60
0.60x market volatility
Max Drawdown
-26.2%
Largest decline past year
52-Week Range
$93-$128
Price range past year
Annual Return
-5.7%
Cumulative gain past year
| Period | EHC Return | S&P 500 |
|---|---|---|
| 1m | +6.6% | +2.0% |
| 3m | +3.5% | +10.6% |
| 6m | +7.9% | +8.3% |
| 1y | -5.7% | +20.4% |
| ytd | +4.4% | +10.2% |
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EHC Fundamental Analysis
Encompass Health's revenue trajectory is solidly growing, with Q4 2025 revenue of $1,544.6 million, up 9.94% year-over-year from $1,405 million in Q4 2024. The multi-quarter trend shows accelerating growth: Q1 2025 revenue was $1,455.4 million (10.6% YoY), Q2 2025 $1,457.7 million (12.0% YoY), Q3 2025 $1,477.5 million (9.4% YoY), and Q4 2025 $1,544.6 million (9.9% YoY). The company's sole segment, inpatient rehabilitation, drives all revenue, with annual inpatient revenue of $4,338.6 million. This consistent growth is supported by demographic tailwinds from an aging population and increasing incidence of conditions requiring rehabilitative care. The company is profitable with net income of $146.1 million in Q4 2025, representing a net margin of 9.46%. Gross margin in Q4 2025 was 22.78%, which is typical for healthcare services with high cost of revenue. Operating margin was 18.35%, stable compared to 16.53% in Q4 2024, indicating improving operational efficiency. Net income has grown from $120.9 million in Q4 2024 to $146.1 million in Q4 2025, a 20.8% increase, outpacing revenue growth and demonstrating margin expansion. The balance sheet shows a debt-to-equity ratio of 1.11, which is moderate for a capital-intensive healthcare company. Free cash flow (TTM) is $439.2 million, providing ample liquidity for debt service and capital expenditures. The current ratio of 1.08 indicates adequate short-term liquidity. Return on equity (ROE) is 23.2%, reflecting strong profitability relative to shareholder equity. The company generated $346 million in operating cash flow in Q4 2025, easily covering capital expenditures of $229.3 million, resulting in positive free cash flow of $116.7 million for the quarter.
Quarterly Revenue
$1.5B
2025-12
Revenue YoY Growth
+9.94%
YoY Comparison
Gross Margin
22.78%
Latest Quarter
Free Cash Flow
$439199999.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is EHC Overvalued?
Since net income is positive, the primary valuation metric is the P/E ratio. The trailing P/E is 18.89x, while the forward P/E is 16.28x, implying the market expects earnings growth. The gap between trailing and forward P/E suggests an anticipated earnings increase of about 16% over the next year. Compared to the industry average (Medical - Care Facilities), the stock's trailing P/E of 18.89x is at a premium to the sector median of approximately 15x (based on industry data), representing a 26% premium. This premium may be justified by Encompass Health's dominant market position, consistent revenue growth, and strong margins relative to peers. Historically, the stock's trailing P/E has ranged from about 14x to 25x over the past five years. The current 18.89x is near the middle of this range, suggesting it is fairly valued relative to its own history. The P/B ratio of 4.37x is also near the historical average, indicating no extreme valuation. The PEG ratio of 0.78x (based on forward earnings growth) suggests the stock is undervalued relative to its growth rate, as a PEG below 1.0 typically indicates undervaluation.
PE
18.9x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 14x~25x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
9.5x
Enterprise Value Multiple
