NYSE:EHC

Stock Analysis Report

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Executive Summary

Encompass Health Corporation provides facility-based and home-based post-acute healthcare services in the United States.


Snowflake Analysis

Proven track record with mediocre balance sheet.


Similar Companies

Share Price & News

How has Encompass Health's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: EHC has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.7%

EHC

2.0%

US Healthcare

1.6%

US Market


1 Year Return

-1.8%

EHC

14.2%

US Healthcare

4.8%

US Market

Return vs Industry: EHC underperformed the US Healthcare industry which returned 14.2% over the past year.

Return vs Market: EHC underperformed the US Market which returned 4.8% over the past year.


Shareholder returns

EHCIndustryMarket
7 Day2.7%2.0%1.6%
30 Day-15.8%-3.7%2.3%
90 Day3.4%26.9%29.5%
1 Year-0.1%-1.8%15.7%14.2%7.1%4.8%
3 Year39.7%32.5%30.1%24.2%37.1%28.1%
5 Year49.7%35.4%41.0%31.4%67.2%48.6%

Price Volatility Vs. Market

How volatile is Encompass Health's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Encompass Health undervalued compared to its fair value and its price relative to the market?

17.78x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: EHC ($62.15) is trading above our estimate of fair value ($56.31)

Significantly Below Fair Value: EHC is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: EHC is good value based on its PE Ratio (17.8x) compared to the Healthcare industry average (24x).

PE vs Market: EHC is poor value based on its PE Ratio (17.8x) compared to the US market (16.5x).


Price to Earnings Growth Ratio

PEG Ratio: EHC is poor value based on its PEG Ratio (1.2x)


Price to Book Ratio

PB vs Industry: EHC is overvalued based on its PB Ratio (4.3x) compared to the US Healthcare industry average (2.7x).


Next Steps

Future Growth

How is Encompass Health forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

15.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: EHC's forecast earnings growth (15.4% per year) is above the savings rate (2.2%).

Earnings vs Market: EHC's earnings (15.4% per year) are forecast to grow slower than the US market (22.8% per year).

High Growth Earnings: EHC's earnings are forecast to grow, but not significantly.

Revenue vs Market: EHC's revenue (8% per year) is forecast to grow slower than the US market (9.3% per year).

High Growth Revenue: EHC's revenue (8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: EHC's Return on Equity is forecast to be high in 3 years time (22.9%)


Next Steps

Past Performance

How has Encompass Health performed over the past 5 years?

13.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: EHC has high quality earnings.

Growing Profit Margin: EHC's current net profit margins (7.3%) are higher than last year (7.1%).


Past Earnings Growth Analysis

Earnings Trend: EHC's earnings have grown by 13.5% per year over the past 5 years.

Accelerating Growth: EHC's earnings growth over the past year (10.9%) is below its 5-year average (13.5% per year).

Earnings vs Industry: EHC earnings growth over the past year (10.9%) exceeded the Healthcare industry 10.1%.


Return on Equity

High ROE: Whilst EHC's Return on Equity (23.45%) is high, this metric is skewed due to their high level of debt.


Next Steps

Financial Health

How is Encompass Health's financial position?


Financial Position Analysis

Short Term Liabilities: EHC's short term assets ($784.5M) exceed its short term liabilities ($586.2M).

Long Term Liabilities: EHC's short term assets ($784.5M) do not cover its long term liabilities ($3.7B).


Debt to Equity History and Analysis

Debt Level: EHC's debt to equity ratio (162.8%) is considered high.

Reducing Debt: EHC's debt to equity ratio has reduced from 277% to 162.8% over the past 5 years.

Debt Coverage: EHC's debt is not well covered by operating cash flow (16.9%).

Interest Coverage: EHC's interest payments on its debt are well covered by EBIT (4.2x coverage).


Balance Sheet


Next Steps

Dividend

What is Encompass Health current dividend yield, its reliability and sustainability?

1.80%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: EHC's dividend (1.8%) is higher than the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: EHC's dividend (1.8%) is low compared to the top 25% of dividend payers in the US market (4.51%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, EHC has been paying a dividend for less than 10 years.

Growing Dividend: EHC's dividend payments have increased, but the company has only paid a dividend for 7 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (31.8%), EHC's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: EHC's dividends in 3 years are forecast to be well covered by earnings (28.2% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.9yrs

Average management tenure


CEO

Mark Tarr (58yo)

3.58yrs

Tenure

US$7,270,287

Compensation

Mr. Mark J. Tarr serves as President, Chief Executive Officer And Director of Encompass Health Corp. since December 29, 2016. Mr. Tarr serves as the Principal Executive Officer and President at HEALTHSOUTH ...


CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD7.27M) is about average for companies of similar size in the US market ($USD7.32M).

Compensation vs Earnings: Mark's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Mark Tarr
CEO, President & Director3.58yrsUS$7.27m0.39% $23.8m
Douglas Coltharp
Executive VP & CFO10.17yrsUS$2.93m0.16% $9.8m
John Darby
Executive VP4.42yrsUS$1.92m0.043% $2.6m
Barbara Jacobsmeyer
Executive VP & President of Inpatient Hospitals2.42yrsUS$2.49m0.045% $2.8m
April Kaye Anthony
Chief Executive Officer of Home Health & Hospice5.58yrsUS$2.53m0.19% $11.9m
Andrew Price
Senior VP & Chief Accounting Officer10.75yrsno data0.072% $4.4m
Rusty Yeager
Chief Information Officer & Senior VP9yrsno datano data
Crissy Carlisle
Chief Investor Relations Officer4.83yrsno datano data
Dawn Rock
Chief Compliance Officer5yrsno datano data
Anthony Hernandez
Chief Human Resources Officer0.50yrno datano data

4.9yrs

Average Tenure

54yo

Average Age

Experienced Management: EHC's management team is considered experienced (4.9 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Mark Tarr
CEO, President & Director3.58yrsUS$7.27m0.39% $23.8m
John Chidsey
Independent Director12.75yrsUS$332.79k0.12% $7.3m
Donald Correll
Independent Director15.08yrsUS$323.24k0.074% $4.5m
Joan Herman
Independent Director7.5yrsUS$289.22k0.029% $1.8m
John Maupin
Independent Director15.92yrsUS$323.24k0.078% $4.8m
Charles Elson
Independent Director15.83yrsUS$323.24k0.079% $4.9m
Leo Higdon
Independent Non-Executive Chairman of the Board6.17yrsUS$448.24k0.077% $4.7m
Leslye Katz
Independent Director7.5yrsUS$299.22k0.029% $1.8m
L. Shaw
Independent Director15.08yrsUS$337.14k0.095% $5.9m
Yvonne Curl
Independent Director15.67yrsUS$339.18k0.075% $4.6m

13.9yrs

Average Tenure

65.5yo

Average Age

Experienced Board: EHC's board of directors are seasoned and experienced ( 13.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: EHC insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Encompass Health Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Encompass Health Corporation
  • Ticker: EHC
  • Exchange: NYSE
  • Founded: 1983
  • Industry: Health Care Facilities
  • Sector: Healthcare
  • Market Cap: US$6.178b
  • Shares outstanding: 99.41m
  • Website: https://www.encompasshealth.com

Number of Employees


Location

  • Encompass Health Corporation
  • 9001 Liberty Parkway
  • Birmingham
  • Alabama
  • 35242
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
EHCNYSE (New York Stock Exchange)YesCommon StockUSUSDSep 1986
HSOADB (Deutsche Boerse AG)YesCommon StockDEEURSep 1986
EHC *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNSep 1986

Biography

Encompass Health Corporation provides facility-based and home-based post-acute healthcare services in the United States. The company operates through two segments, Inpatient Rehabilitation, and Home Health and Hospice. The Inpatient Rehabilitation segment provides specialized rehabilitative treatment on an inpatient and outpatient basis to patients who are recovering from conditions, such as stroke and other neurological disorders, cardiac and pulmonary conditions, brain and spinal cord injuries, complex orthopedic conditions, and amputations. The Home Health and Hospice segment provides home health and hospice services primarily in the Southeast and Texas. Its home health services include a range of Medicare-certified home nursing services to adult patients in need of care comprising skilled nursing, medical social work, and home health aide services, as well as physical, occupational, speech therapy, and others. This segment’s hospice services comprise in-home services to terminally ill patients and their families to address patients’ physical needs, including pain control and symptom management, and to provide emotional and spiritual support. As of June 15, 2020, Encompass Health Corporation operated 136 hospitals, 245 home health locations, and 83 hospice locations in 39 states and Puerto Rico. The company was formerly known as HealthSouth Corporation and changed its name to Encompass Health Corporation in January 2018. Encompass Health Corporation was founded in 1983 and is based in Birmingham, Alabama. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/07/02 23:52
End of Day Share Price2020/07/02 00:00
Earnings2020/03/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.