Encompass Health (EHC): Assessing Valuation as New Florida Rehab Hospital Opens

Encompass Health (EHC) just opened the doors to a brand-new 50-bed inpatient rehabilitation hospital in The Villages, Central Florida, and it is already welcoming its first patients. This move stands out as a meaningful expansion for the company and is designed to address surging demand for intensive rehabilitation services in one of the country’s fastest-growing retirement communities. Advanced therapy technology and personalized care at this facility serve as important additions not only for patients but for investors tracking the company’s execution of its 2025 growth strategy.

As Encompass Health continues to invest in growing its national footprint, its stock has outperformed many peers, up 36% over the past year and gaining strong momentum year-to-date. The steady stream of hospital openings, like this new facility, has become a core part of the company’s long-term playbook. Recent business moves hint at increasing confidence in the firm’s trajectory, both internally and in the wider market.

With solid stock gains and a commitment to expansion, is the market fully recognizing Encompass Health’s growth potential or could there still be room for upside?

Most Popular Narrative: 7% Undervalued

According to the most widely followed narrative, Encompass Health is currently undervalued by 7% compared to its fair value estimate. Analysts point to a robust growth outlook supported by key demographic and business trends.

The surge in the 65-plus population and persistent undersupply of inpatient rehabilitation beds are driving high and still-unmet demand for Encompass Health's core services. Ongoing hospital openings and bed expansions position the company to capture significant incremental patient volume, supporting higher revenue growth for years to come.

Want to uncover what’s fueling this bullish view? The market’s price target comes from bold growth assumptions and a future profit multiple that rivals industry leaders. Curious which projections and metrics triggered this premium value? Dive deeper to reveal the eye-opening numbers driving Encompass Health’s fair value estimate.

Result: Fair Value of $135.75 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent labor shortages and the industry's shift toward value-based, outpatient care could threaten Encompass Health’s growth trajectory if these trends accelerate.

Find out about the key risks to this Encompass Health narrative.

Another View: Market Ratio Signals

Looking at valuation from a different angle, Encompass Health appears expensive when compared with the industry’s standard measure for healthcare stocks. Does this suggest the market is pricing in more optimism than the fundamentals support?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Encompass Health to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Encompass Health Narrative

Feel inspired to dig deeper or chart your own course? It takes just minutes to analyze the numbers and shape your own unique perspective. Do it your way.

A great starting point for your Encompass Health research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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