Encompass Health Corporation
$103.17
+1.4%Encompass Health Corporation provides facility-based and home-based post-acute healthcare services in the United States. The company operates in 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. As of June 1, 2022, it operated 149 hospitals, 252 home health locations, and 99 hospice locations in 42 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.
At a Glance
Live SnapshotIntrinsic Alpha Methodology
Thesis Lenses
Signal
High confidenceValuation multiple is mid-range (P/E 18.4).
Valuation inputs: P/E 18.4, earnings yield +5.4%, momentum +1.4%.
If multiples stay elevated while momentum fades, downside repricing risk rises.
Driver
High confidenceReturn profile is strong (ROE +23.2%, ROIC +13.3%).
Profitability stack: net margin +9.5%, ROE +23.2%, ROIC +13.3%.
Quality deterioration often appears in margins before it shows up in headline EPS.
Risk
High confidenceDownside profile looks controlled across current risk inputs.
Risk factors: liabilities/assets +53.8%, momentum +1.4%, net margin +9.5%.
Higher leverage with weak momentum and thin margins can amplify drawdown severity.
Encompass Health Corporation Market vs Earnings Trajectory
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Encompass Health Corporation Fair Value Envelope
Encompass Health Corporation Profit Bridge
Profitability Analysis
Gross Margin
Exceptional pricing power and cost management. The company retains over half of revenue after direct costs.
Operating Margin
Healthy operating margins demonstrate effective cost control and strong business fundamentals.
Net Profit Margin
Moderate profitability with room for improvement. Monitor interest expenses and tax efficiency.
Effective Tax Rate
Moderate tax rate typical for most corporations. Represents standard tax burden on profits.
Profitability Insight
High margin compression: Large gap between gross and net margins suggests operational inefficiencies or heavy debt burden. Focus on expense management and deleveraging.
Encompass Health Corporation Cash Conversion Engine
Cash Flow Quality Analysis
FCF Conversion Rate
Moderate conversion rate. Some gap between earnings and cash flow may warrant investigation into working capital or non-cash items.
CapEx Intensity
Very high capital intensity consumes most operating cash flow. Limited flexibility for dividends or debt reduction.
FCF Growth Trend
Strong FCF growth demonstrates improving cash generation and business momentum. Positive signal for sustainability.
Working Capital Impact
Working capital inflow boosted cash flow. Efficient management of receivables, inventory, and payables contributing positively.
Cash Flow Quality Insight
Capital-intensive growth: Heavy reinvestment limits current cash available but may drive future returns. Assess whether CapEx supports compelling growth opportunities with adequate ROI.
Encompass Health Corporation Funding & Solvency Profile
Financial Health Analysis
Current Ratio
Acceptable liquidity, but monitor closely. Current assets just barely cover current liabilities.
Debt-to-Equity Ratio
Elevated leverage. Debt exceeds equity, which amplifies both gains and risks. Monitor debt servicing ability.
Working Capital
Positive working capital, but relatively tight. The company should monitor cash flow carefully.
Asset Composition
Capital-intensive business with significant long-term investments in property, equipment, or intangibles.
Encompass Health Corporation Street Expectations Map
Wall Street analysts project that EHC stock may rise significantly over the coming 12 months. The consensus 1-year price target stands at 146.00, with estimates ranging from a low of 140.00 to a high of 152.00.
The consensus 1-year price target stands at 146.00, with estimates ranging from a low of 140.00 to a high of 152.00.
Analyst Consensus Analysis
Upside Potential
Substantial upside potential. Analysts see significant value gap, suggesting the stock may be materially undervalued at current levels.
Analyst Agreement
High analyst agreement. Narrow target range indicates strong consensus on valuation, suggesting clear investment thesis and predictable outlook.
Analyst Conviction
Strong buy conviction: High upside with tight consensus suggests compelling investment opportunity backed by analyst confidence.
Market Sentiment Insight
Rare opportunity: Exceptional upside potential with strong analyst consensus creates a compelling setup. The combination of significant price target premium and tight agreement suggests high-conviction undervaluation that may attract institutional capital.
Encompass Health Corporation Insider Positioning
During the last 12 months, insiders have sold $6.49M worth of EHC shares, with no buying activity reported.
3 Months
0
0.00
40.3K
4.31M
-4.3M
-$4.31M
3-6 Months
0
0.00
19.0K
2.05M
-2.1M
-$2.05M
6-9 Months
0
0.00
0
0.00
+0
+$0
9-12 Months
0
0.00
1.0K
126.06K
-126K
-$126K
Top Buyers
No buying activity
Top Sellers
Coltharp Douglas E
Officer: Evp & Chief Financial Officer
$2.96M
Tarr Mark J
Director, Officer: President & Ceo
$1.75M
Fay Edmund
Officer: Sr. Vice Pres. And Treasurer
$1.28M
Tuer Patrick William
Officer: Evp, Chief Operating Officer
$499K
Insider Activity Analysis
Net Insider Sentiment
Strong bearish signal with $6.49M net selling. Heavy insider selling may indicate concerns about valuation or near-term prospects.
Buy/Sell Ratio
Very poor ratio. Heavy selling with minimal buying suggests insiders may be concerned about valuation or outlook.
Recent Trend (3 Months)
Heavy recent selling activity. Recent insider sales notably exceed purchases—may warrant investigation into company developments.
Insider Participation
4 insider sellers vs. 0 buyers. Widespread selling across multiple insiders may signal concerns.
Insider Activity Insight
Multiple red flags: Heavy selling, numerous sellers, and continued recent selling create a concerning pattern. Investigate fundamental drivers and consider whether company guidance or industry conditions have deteriorated.
ehc Dividend History
Learning Layer
Related Guides
Build conviction on EHC by pairing this stock hub with focused valuation guides.
Research Paths
Snapshot
Start with context, operating signals, and key market metrics.
Value Model
Stress test fair value across bear, base, and bull assumptions.
Statements
Validate revenue quality, margins, and balance sheet durability.
Earnings Call
Read management commentary and compare it with reported outcomes.
Dividends
Check payout sustainability and long-term distribution behavior.
Analyst Expectations
Review consensus spread and where estimate risk is concentrated.