ENCOMPASS HEALTH CORP (EHC) Stock Fundamental Analysis
NYSE:EHC - New York Stock Exchange, Inc. - US29261A1007 - Common Stock - Currency: USD
Overall EHC gets a fundamental rating of 5 out of 10. We evaluated EHC against 103 industry peers in the Health Care Providers & Services industry. EHC scores excellent on profitability, but there are concerns on its financial health. While showing a medium growth rate, EHC is valued expensive at the moment.
1. Profitability
1.1 Basic Checks
In the past year EHC was profitable.
EHC had a positive operating cash flow in the past year.
EHC had positive earnings in each of the past 5 years.
In the past 5 years EHC always reported a positive cash flow from operatings.
1.2 Ratios
EHC has a better Return On Assets (7.41%) than 91.18% of its industry peers.
EHC has a Return On Equity of 22.79%. This is amongst the best in the industry. EHC outperforms 89.22% of its industry peers.
EHC has a Return On Invested Capital of 12.63%. This is amongst the best in the industry. EHC outperforms 88.24% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for EHC is in line with the industry average of 9.60%.
The last Return On Invested Capital (12.63%) for EHC is above the 3 year average (10.83%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.41% | ||
| ROE | 22.79% | ||
| ROIC | 12.63% |
ROA(3y)5.82%
ROA(5y)5.56%
ROE(3y)21.24%
ROE(5y)20.61%
ROIC(3y)10.83%
ROIC(5y)9.67%
1.3 Margins
EHC has a Profit Margin of 8.93%. This is amongst the best in the industry. EHC outperforms 93.14% of its industry peers.
EHC's Profit Margin has improved in the last couple of years.
EHC's Operating Margin of 16.76% is amongst the best of the industry. EHC outperforms 94.12% of its industry peers.
In the last couple of years the Operating Margin of EHC has remained more or less at the same level.
EHC's Gross Margin of 95.60% is amongst the best of the industry. EHC outperforms 99.02% of its industry peers.
In the last couple of years the Gross Margin of EHC has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 16.76% | ||
| PM (TTM) | 8.93% | ||
| GM | 95.6% |
OM growth 3Y-0.68%
OM growth 5Y1.36%
PM growth 3Y-6.23%
PM growth 5Y1.66%
GM growth 3Y0.05%
GM growth 5Y-0.17%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so EHC is still creating some value.
Compared to 1 year ago, EHC has more shares outstanding
EHC has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, EHC has an improved debt to assets ratio.
2.2 Solvency
EHC has an Altman-Z score of 3.12. This indicates that EHC is financially healthy and has little risk of bankruptcy at the moment.
EHC has a better Altman-Z score (3.12) than 67.65% of its industry peers.
The Debt to FCF ratio of EHC is 6.40, which is on the high side as it means it would take EHC, 6.40 years of fcf income to pay off all of its debts.
EHC's Debt to FCF ratio of 6.40 is in line compared to the rest of the industry. EHC outperforms 57.84% of its industry peers.
EHC has a Debt/Equity ratio of 1.08. This is a high value indicating a heavy dependency on external financing.
EHC's Debt to Equity ratio of 1.08 is on the low side compared to the rest of the industry. EHC is outperformed by 64.71% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.08 | ||
| Debt/FCF | 6.4 | ||
| Altman-Z | 3.12 |
ROIC/WACC1.53
WACC8.24%
2.3 Liquidity
A Current Ratio of 1.06 indicates that EHC should not have too much problems paying its short term obligations.
EHC has a worse Current ratio (1.06) than 71.57% of its industry peers.
EHC has a Quick Ratio of 1.06. This is a normal value and indicates that EHC is financially healthy and should not expect problems in meeting its short term obligations.
EHC's Quick ratio of 1.06 is on the low side compared to the rest of the industry. EHC is outperformed by 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.06 | ||
| Quick Ratio | 1.06 |
3. Growth
3.1 Past
EHC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 20.62%, which is quite impressive.
Measured over the past 5 years, EHC shows a small growth in Earnings Per Share. The EPS has been growing by 2.58% on average per year.
The Revenue has grown by 11.21% in the past year. This is quite good.
The Revenue has been growing slightly by 3.13% on average over the past years.
EPS 1Y (TTM)20.62%
EPS 3Y1.63%
EPS 5Y2.58%
EPS Q2Q%22.32%
Revenue 1Y (TTM)11.21%
Revenue growth 3Y10.2%
Revenue growth 5Y3.13%
Sales Q2Q%10.59%
3.2 Future
The Earnings Per Share is expected to grow by 5.48% on average over the next years.
Based on estimates for the next years, EHC will show a quite strong growth in Revenue. The Revenue will grow by 8.05% on average per year.
EPS Next Y14.28%
EPS Next 2Y12.93%
EPS Next 3Y11.77%
EPS Next 5Y5.48%
Revenue Next Year10.12%
Revenue Next 2Y9.34%
Revenue Next 3Y8.73%
Revenue Next 5Y8.05%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 25.83 indicates a quite expensive valuation of EHC.
Based on the Price/Earnings ratio, EHC is valued a bit cheaper than 60.78% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.25. EHC is around the same levels.
EHC is valuated rather expensively with a Price/Forward Earnings ratio of 21.40.
The rest of the industry has a similar Price/Forward Earnings ratio as EHC.
EHC is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.15, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.83 | ||
| Fwd PE | 21.4 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, EHC is valued a bit cheaper than the industry average as 62.75% of the companies are valued more expensively.
EHC's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.59 | ||
| EV/EBITDA | 11.76 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates EHC does not grow enough to justify the current Price/Earnings ratio.
EHC has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.81
PEG (5Y)10.01
EPS Next 2Y12.93%
EPS Next 3Y11.77%
5. Dividend
5.1 Amount
EHC has a yearly dividend return of 0.57%, which is pretty low.
EHC's Dividend Yield is rather good when compared to the industry average which is at 2.45. EHC pays more dividend than 81.37% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.38, EHC's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.57% |
5.2 History
The dividend of EHC decreases each year by -10.71%.
EHC has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)-10.71%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
EHC pays out 13.19% of its income as dividend. This is a sustainable payout ratio.
DP13.19%
EPS Next 2Y12.93%
EPS Next 3Y11.77%
120.9
+0.89 (+0.74%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupHealth Care Equipment & Services
GICS IndustryHealth Care Providers & Services
Earnings (Last)
Earnings (Next)
Inst Owners97.31%
Inst Owner Change1.23%
Ins Owners1.14%
Ins Owner Change-2.13%
Market Cap12.21B
Analysts86.25
Price Target132.69 (9.75%)
Short Float %1.9%
Short Ratio2.05
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.57% |
Yearly Dividend0.62
Dividend Growth(5Y)-10.71%
DP13.19%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)13.53%
Min EPS beat(2)12.94%
Max EPS beat(2)14.11%
EPS beat(4)4
Avg EPS beat(4)10.9%
Min EPS beat(4)8.15%
Max EPS beat(4)14.11%
EPS beat(8)8
Avg EPS beat(8)14.29%
EPS beat(12)11
Avg EPS beat(12)11.51%
EPS beat(16)13
Avg EPS beat(16)9.36%
Revenue beat(2)2
Avg Revenue beat(2)0.75%
Min Revenue beat(2)0.72%
Max Revenue beat(2)0.79%
Revenue beat(4)3
Avg Revenue beat(4)0.24%
Min Revenue beat(4)-1.27%
Max Revenue beat(4)0.79%
Revenue beat(8)6
Avg Revenue beat(8)0.56%
Revenue beat(12)9
Avg Revenue beat(12)-1.25%
Revenue beat(16)9
Avg Revenue beat(16)-7.71%
PT rev (1m)11.02%
PT rev (3m)10.95%
EPS NQ rev (1m)2.54%
EPS NQ rev (3m)3.34%
EPS NY rev (1m)4.3%
EPS NY rev (3m)4.54%
Revenue NQ rev (1m)0.35%
Revenue NQ rev (3m)0.49%
Revenue NY rev (1m)0.57%
Revenue NY rev (3m)0.63%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.83 | ||
| Fwd PE | 21.4 | ||
| P/S | 2.21 | ||
| P/FCF | 31.59 | ||
| P/OCF | 11.6 | ||
| P/B | 5.65 | ||
| P/tB | 21.03 | ||
| EV/EBITDA | 11.76 |
EPS(TTM)4.68
EY3.87%
EPS(NY)5.65
Fwd EY4.67%
FCF(TTM)3.83
FCFY3.17%
OCF(TTM)10.42
OCFY8.62%
SpS54.6
BVpS21.38
TBVpS5.75
PEG (NY)1.81
PEG (5Y)10.01
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.41% | ||
| ROE | 22.79% | ||
| ROCE | 15.97% | ||
| ROIC | 12.63% | ||
| ROICexc | 12.85% | ||
| ROICexgc | 17.78% | ||
| OM | 16.76% | ||
| PM (TTM) | 8.93% | ||
| GM | 95.6% | ||
| FCFM | 7.01% |
ROA(3y)5.82%
ROA(5y)5.56%
ROE(3y)21.24%
ROE(5y)20.61%
ROIC(3y)10.83%
ROIC(5y)9.67%
ROICexc(3y)10.95%
ROICexc(5y)9.82%
ROICexgc(3y)15.47%
ROICexgc(5y)15.57%
ROCE(3y)13.69%
ROCE(5y)12.22%
ROICexcg growth 3Y1.55%
ROICexcg growth 5Y-5.09%
ROICexc growth 3Y12.32%
ROICexc growth 5Y3.22%
OM growth 3Y-0.68%
OM growth 5Y1.36%
PM growth 3Y-6.23%
PM growth 5Y1.66%
GM growth 3Y0.05%
GM growth 5Y-0.17%
F-Score7
Asset Turnover0.83
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.08 | ||
| Debt/FCF | 6.4 | ||
| Debt/EBITDA | 1.89 | ||
| Cap/Depr | 215.95% | ||
| Cap/Sales | 12.09% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 85.4% | ||
| Profit Quality | 78.54% | ||
| Current Ratio | 1.06 | ||
| Quick Ratio | 1.06 | ||
| Altman-Z | 3.12 |
F-Score7
WACC8.24%
ROIC/WACC1.53
Cap/Depr(3y)222.37%
Cap/Depr(5y)209.98%
Cap/Sales(3y)12.51%
Cap/Sales(5y)12.54%
Profit Quality(3y)67.08%
Profit Quality(5y)69.21%
High Growth Momentum
Growth
EPS 1Y (TTM)20.62%
EPS 3Y1.63%
EPS 5Y2.58%
EPS Q2Q%22.32%
EPS Next Y14.28%
EPS Next 2Y12.93%
EPS Next 3Y11.77%
EPS Next 5Y5.48%
Revenue 1Y (TTM)11.21%
Revenue growth 3Y10.2%
Revenue growth 5Y3.13%
Sales Q2Q%10.59%
Revenue Next Year10.12%
Revenue Next 2Y9.34%
Revenue Next 3Y8.73%
Revenue Next 5Y8.05%
EBIT growth 1Y21.47%
EBIT growth 3Y9.45%
EBIT growth 5Y4.54%
EBIT Next Year47.5%
EBIT Next 3Y20.4%
EBIT Next 5YN/A
FCF growth 1Y158.81%
FCF growth 3Y29.84%
FCF growth 5Y9.28%
OCF growth 1Y47.26%
OCF growth 3Y11.89%
OCF growth 5Y9.56%