Encompass Health Corp (EHC) stock analysis

P/E above its 5-year median

Encompass Health's P/E of 23.2 is above its own 5-year median of 21.4.

P/E below the industry

Encompass Health's P/E of 23.2 is below the Health Services median of 23.9.

EV/EBITDA above its 5-year median

Encompass Health's EV/EBITDA of 11.6 is above its 5-year median of 11.2.

P/B above the industry

Encompass Health's price-to-book of 5.41 is above the Health Services median of 3.52.

Trading above fair value

The share price of $142.51 is above our fair value estimate of $125.04.

Margin of safety under 20%

The price is 14.0% above fair value, so there is no margin of safety.

Revenue growing 10%+ a year

Revenue grew 10.9% a year over the last three fiscal years.

EPS growing 10%+ a year

Diluted EPS grew 27.1% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 18.8% over the last twelve months, against a 5-year average of 14.8% a year.

Growing faster than the industry

Revenue grew 9.5% over the last twelve months; the Health Services median is 4.0%.

Guidance lowered

Encompass Health lowered its 2026 Amortization of debt-related items outlook on Aug 5, 2026.

Gross margin trend

This company does not report gross profit.

Return on equity over 15%

Return on equity was 25.5% over the last twelve months and averaged 22.8% over five years.

Return on invested capital

Needs operating income and invested capital.

Return on equity above the industry

Encompass Health's return on equity of 25.5% is above the Health Services median of 4.6%.

Earnings grew over 5 years

Net income grew 14.8% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 10.0% over the last twelve months, against a 5-year average of 8.4%.

Net margin above the industry

Encompass Health's net margin of 10.0% is above the Health Services median of -2.6%.

High debt

Debt is 101% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 207% five years ago to 101%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 46.0% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.19 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.97; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Encompass Health paid dividends worth 0.5% of the share price over the last twelve months.

Yield below Treasuries

The 0.5% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Encompass Health yields 0.5%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 12.1% of net income.

Covered by free cash flow

Dividends take 18.2% of free cash flow.