Encompass Health (NYSE:EHC) Shares Gap Up After Earnings Beat

Key Points

• Encompass Health shares jumped 10.7% after the company reported quarterly EPS of $1.55, beating estimates by $0.07, while revenue of $1.60 billion exceeded forecasts and rose 9.6% year over year.
• The company increased its quarterly dividend to $0.21 per share from $0.19, implying an annualized dividend of $0.84 and a 0.7% yield.
• Analysts maintain a “Moderate Buy” consensus with an average price target of $144.43; institutional investors own 97.25% of the stock.

Encompass Health Corporation (NYSE:EHC - Get Free Report)'s stock price gapped up before the market opened on Thursday after the company announced better than expected quarterly earnings. The stock had previously closed at $110.90, but opened at $124.81. Encompass Health shares last traded at $123.3670, with a volume of 165,012 shares.

The company reported $1.55 EPS for the quarter, topping analysts' consensus estimates of $1.48 by $0.07. The firm had revenue of $1.60 billion for the quarter, compared to analyst estimates of $1.57 billion. Encompass Health had a return on equity of 18.28% and a net margin of 10.04%.The company's revenue was up 9.6% on a year-over-year basis. During the same quarter last year, the company earned $1.40 EPS. Encompass Health has set its FY 2026 guidance at 6.020-6.250 EPS.

Encompass Health Increases Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Thursday, October 15th. Shareholders of record on Thursday, October 1st will be paid a dividend of $0.21 per share. The ex-dividend date is Thursday, October 1st. This is a positive change from Encompass Health's previous quarterly dividend of $0.19. This represents a $0.84 dividend on an annualized basis and a yield of 0.7%. Encompass Health's dividend payout ratio is currently 14.02%.

Analyst Upgrades and Downgrades

A number of analysts have recently weighed in on the stock. Wall Street Zen raised shares of Encompass Health from a "hold" rating to a "buy" rating in a report on Saturday, May 2nd. Weiss Ratings cut shares of Encompass Health from a "buy (b-)" rating to a "hold (c+)" rating in a research note on Friday, June 26th. TD Cowen began coverage on Encompass Health in a research note on Thursday, May 28th. They set a "buy" rating and a $125.00 target price for the company. Barclays raised their target price on Encompass Health from $140.00 to $144.00 and gave the company an "overweight" rating in a report on Thursday. Finally, Leerink Partners set a $152.00 price target on Encompass Health in a report on Friday, May 22nd. One equities research analyst has rated the stock with a Strong Buy rating, six have given a Buy rating and two have assigned a Hold rating to the company's stock. According to MarketBeat, Encompass Health has a consensus rating of "Moderate Buy" and an average target price of $144.43.

Insider Transactions at Encompass Health

In related news, EVP Patrick William Tuer sold 682 shares of the stock in a transaction that occurred on Monday, May 11th. The shares were sold at an average price of $104.56, for a total value of $71,309.92. Following the completion of the transaction, the executive vice president owned 24,755 shares of the company's stock, valued at $2,588,382.80. This represents a 2.68% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. 1.80% of the stock is currently owned by corporate insiders.

Institutional Inflows and Outflows

Institutional investors have recently modified their holdings of the stock. Northwestern Mutual Wealth Management Co. boosted its position in Encompass Health by 3,059,159.7% during the 4th quarter. Northwestern Mutual Wealth Management Co. now owns 3,793,482 shares of the company's stock worth $402,640,000 after buying an additional 3,793,358 shares during the period. Norges Bank bought a new position in shares of Encompass Health during the fourth quarter valued at $133,221,000. Price T Rowe Associates Inc. MD lifted its holdings in shares of Encompass Health by 24.6% during the fourth quarter. Price T Rowe Associates Inc. MD now owns 4,805,413 shares of the company's stock worth $510,047,000 after purchasing an additional 948,202 shares during the period. Millennium Management LLC grew its stake in shares of Encompass Health by 140.0% in the third quarter. Millennium Management LLC now owns 1,223,665 shares of the company's stock worth $155,430,000 after purchasing an additional 713,738 shares during the last quarter. Finally, 8 Knots Management LLC acquired a new stake in Encompass Health in the second quarter valued at $78,644,000. 97.25% of the stock is currently owned by institutional investors and hedge funds.

Encompass Health Stock Up 10.7%

The firm has a market capitalization of $12.18 billion, a price-to-earnings ratio of 20.56, a P/E/G ratio of 2.41 and a beta of 0.72. The company has a debt-to-equity ratio of 0.76, a current ratio of 1.17 and a quick ratio of 1.17. The stock has a fifty day moving average of $106.14 and a two-hundred day moving average of $104.27.

About Encompass Health

Encompass Health Corporation is a leading provider of post‐acute healthcare services in the United States, operating a comprehensive network of inpatient rehabilitation hospitals and home health and hospice agencies. Its inpatient rehabilitation hospitals offer intensive therapy programs for patients recovering from conditions such as stroke, brain injury, spinal cord injury, cardiac and pulmonary disorders, and orthopedic procedures. Through its home health segment, Encompass Health delivers skilled nursing, physical therapy, occupational therapy and speech therapy to patients in the comfort of their homes, while its hospice services provide end‐of‐life care focused on symptom management and emotional support for patients and families.

Founded in 1984 as HealthSouth Corporation and rebranded as Encompass Health in 2018, the company has grown organically and through acquisitions to serve patients across more than 30 states.

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