ENCOMPASS HEALTH CORP (EHC) Stock Fundamental Analysis
NYSE:EHC - New York Stock Exchange, Inc. - US29261A1007 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to EHC. EHC was compared to 103 industry peers in the Health Care Providers & Services industry. EHC scores excellent on profitability, but there are concerns on its financial health. EHC has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
EHC had positive earnings in the past year.
In the past year EHC had a positive cash flow from operations.
EHC had positive earnings in each of the past 5 years.
EHC had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
EHC has a Return On Assets of 7.41%. This is amongst the best in the industry. EHC outperforms 90.29% of its industry peers.
EHC has a better Return On Equity (22.79%) than 90.29% of its industry peers.
The Return On Invested Capital of EHC (12.63%) is better than 88.35% 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 9.71%.
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 92.23% of its industry peers.
In the last couple of years the Profit Margin of EHC has grown nicely.
With an excellent Operating Margin value of 16.76%, EHC belongs to the best of the industry, outperforming 93.20% of the companies in the same industry.
EHC's Operating Margin has been stable in the last couple of years.
Looking at the Gross Margin, with a value of 95.60%, EHC belongs to the top of the industry, outperforming 99.03% of the companies in the same industry.
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
EHC has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
EHC has more shares outstanding than it did 1 year ago.
EHC has more shares outstanding than it did 5 years ago.
The debt/assets ratio for EHC has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 3.10 indicates that EHC is not in any danger for bankruptcy at the moment.
EHC has a better Altman-Z score (3.10) than 65.05% of its industry peers.
EHC has a debt to FCF ratio of 6.40. This is a slightly negative value and a sign of low solvency as EHC would need 6.40 years to pay back of all of its debts.
EHC has a Debt to FCF ratio (6.40) which is in line with its industry peers.
EHC has a Debt/Equity ratio of 1.08. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 1.08, EHC is doing worse than 65.05% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.08 | ||
| Debt/FCF | 6.4 | ||
| Altman-Z | 3.1 |
ROIC/WACC1.53
WACC8.24%
2.3 Liquidity
EHC has a Current 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 has a worse Current ratio (1.06) than 70.87% 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 66.02% 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.
Looking at the last year, EHC shows a quite strong growth in Revenue. The Revenue has grown by 11.21% in the last year.
EHC shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.13% yearly.
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
Based on estimates for the next years, EHC will show a small growth in Earnings Per Share. The EPS will grow by 7.92% on average per year.
EHC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.10% yearly.
EPS Next Y14.16%
EPS Next 2Y12.84%
EPS Next 3Y11.69%
EPS Next 5Y7.92%
Revenue Next Year10.14%
Revenue Next 2Y9.36%
Revenue Next 3Y8.81%
Revenue Next 5Y8.1%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
EHC is valuated quite expensively with a Price/Earnings ratio of 25.31.
Compared to the rest of the industry, the Price/Earnings ratio of EHC indicates a somewhat cheap valuation: EHC is cheaper than 61.16% of the companies listed in the same industry.
EHC's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.30.
The Price/Forward Earnings ratio is 20.99, which indicates a rather expensive current valuation of EHC.
The rest of the industry has a similar Price/Forward Earnings ratio as EHC.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.76, EHC is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.31 | ||
| Fwd PE | 20.99 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, EHC is valued a bit cheaper than 62.14% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of EHC is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.95 | ||
| EV/EBITDA | 11.63 |
4.3 Compensation for Growth
EHC's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
EHC has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.79
PEG (5Y)9.8
EPS Next 2Y12.84%
EPS Next 3Y11.69%
5. Dividend
5.1 Amount
EHC has a yearly dividend return of 0.58%, which is pretty low.
EHC's Dividend Yield is rather good when compared to the industry average which is at 2.50. EHC pays more dividend than 81.55% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.35, EHC's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.58% |
5.2 History
The dividend of EHC decreases each year by -10.71%.
EHC has been paying a dividend for at least 10 years, so it has a reliable track record.
EHC has decreased its dividend recently.
Dividend Growth(5Y)-10.71%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
13.19% of the earnings are spent on dividend by EHC. This is a low number and sustainable payout ratio.
DP13.19%
EPS Next 2Y12.84%
EPS Next 3Y11.69%
118.43
+0.94 (+0.8%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupHealth Care Equipment & Services
GICS IndustryHealth Care Providers & Services
Earnings (Last)
Earnings (Next)
Inst Owners97.78%
Inst Owner Change0%
Ins Owners1.24%
Ins Owner Change0.84%
Market Cap11.96B
Analysts87.06
Price Target134.22 (13.33%)
Short Float %0.85%
Short Ratio1.06
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.58% |
Yearly Dividend0.62
Dividend Growth(5Y)-10.71%
DP13.19%
Div Incr Years1
Div Non Decr Years1
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)0.24%
PT rev (3m)12.22%
EPS NQ rev (1m)0.1%
EPS NQ rev (3m)2.64%
EPS NY rev (1m)-0.1%
EPS NY rev (3m)4.02%
Revenue NQ rev (1m)0.07%
Revenue NQ rev (3m)0.42%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.59%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.31 | ||
| Fwd PE | 20.99 | ||
| P/S | 2.17 | ||
| P/FCF | 30.95 | ||
| P/OCF | 11.36 | ||
| P/B | 5.54 | ||
| P/tB | 20.6 | ||
| EV/EBITDA | 11.63 |
EPS(TTM)4.68
EY3.95%
EPS(NY)5.64
Fwd EY4.76%
FCF(TTM)3.83
FCFY3.23%
OCF(TTM)10.42
OCFY8.8%
SpS54.6
BVpS21.38
TBVpS5.75
PEG (NY)1.79
PEG (5Y)9.8
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 | 3.1 |
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 Y14.16%
EPS Next 2Y12.84%
EPS Next 3Y11.69%
EPS Next 5Y7.92%
Revenue 1Y (TTM)11.21%
Revenue growth 3Y10.2%
Revenue growth 5Y3.13%
Sales Q2Q%10.59%
Revenue Next Year10.14%
Revenue Next 2Y9.36%
Revenue Next 3Y8.81%
Revenue Next 5Y8.1%
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%