Encompass Health (NYSE:EHC) Trading 4.4% Higher - Should You Buy?

Key Points

• Encompass Health shares rose 4.4% on Friday, trading as high as $104.78, though volume was well below average.
• Wall Street sentiment remains positive: several firms recently reiterated or initiated buy/overweight ratings, and the consensus target price is about $143.86.
• The company topped quarterly expectations with $1.60 EPS versus $1.51 expected and revenue of $1.59 billion, while also declaring a $0.19 quarterly dividend payable July 15.

Shares of Encompass Health Corporation (NYSE:EHC - Get Free Report) rose 4.4% on Friday . The stock traded as high as $104.78 and last traded at $104.2150. Approximately 290,254 shares changed hands during trading, a decline of 73% from the average daily volume of 1,087,874 shares. The stock had previously closed at $99.84.

Analyst Upgrades and Downgrades

Several brokerages have commented on EHC. TD Cowen initiated coverage on shares of Encompass Health in a research report on Thursday, May 28th. They issued a "buy" rating and a $125.00 price target on the stock. Wall Street Zen raised shares of Encompass Health from a "hold" rating to a "buy" rating in a research note on Saturday, May 2nd. Barclays dropped their target price on shares of Encompass Health from $153.00 to $140.00 and set an "overweight" rating on the stock in a report on Tuesday, May 5th. Finally, Leerink Partners set a $152.00 target price on shares of Encompass Health in a report on Friday, May 22nd. One analyst has rated the stock with a Strong Buy rating, seven have issued a Buy rating and one has given a Hold rating to the company. Based on data from MarketBeat, the stock has an average rating of "Buy" and an average target price of $143.86.

Encompass Health Price Performance

The stock has a 50-day moving average of $103.68 and a two-hundred day moving average of $105.01. The firm has a market cap of $10.36 billion, a price-to-earnings ratio of 17.43, a price-to-earnings-growth ratio of 2.25 and a beta of 0.72. The company has a current ratio of 1.17, a quick ratio of 1.17 and a debt-to-equity ratio of 0.76.

Encompass Health (NYSE:EHC - Get Free Report) last issued its quarterly earnings results on Thursday, April 30th. The company reported $1.60 EPS for the quarter, beating the consensus estimate of $1.51 by $0.09. Encompass Health had a net margin of 10.04% and a return on equity of 18.28%. The business had revenue of $1.59 billion during the quarter, compared to the consensus estimate of $1.57 billion. During the same quarter in the prior year, the firm earned $1.37 EPS. The firm's quarterly revenue was up 9.0% on a year-over-year basis. Encompass Health has set its FY 2026 guidance at 5.890-6.110 EPS. On average, analysts anticipate that Encompass Health Corporation will post 5.97 EPS for the current year.

Encompass Health Announces Dividend

The firm also recently declared a quarterly dividend, which will be paid on Wednesday, July 15th. Stockholders of record on Wednesday, July 1st will be issued a dividend of $0.19 per share. The ex-dividend date is Wednesday, July 1st. This represents a $0.76 dividend on an annualized basis and a dividend yield of 0.7%. Encompass Health's payout ratio is currently 12.69%.

Insider Activity

In other Encompass Health news, Treasurer Edmund Fay sold 11,937 shares of the firm's stock in a transaction dated Monday, March 9th. The stock was sold at an average price of $107.00, for a total transaction of $1,277,259.00. Following the completion of the sale, the treasurer directly owned 89,325 shares in the company, valued at approximately $9,557,775. This trade represents a 11.79% decrease in their position. The sale was disclosed in a legal filing with the SEC, which is available through this hyperlink. Also, EVP Patrick William Tuer sold 682 shares of the company's stock in a transaction dated 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 in the company, valued at $2,588,382.80. This represents a 2.68% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. 1.80% of the stock is currently owned by corporate insiders.

Institutional Investors Weigh In On Encompass Health

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in EHC. Avidity Partners Management LP boosted its stake in shares of Encompass Health by 32.9% during the 1st quarter. Avidity Partners Management LP now owns 42,000 shares of the company's stock valued at $4,063,000 after buying an additional 10,400 shares during the period. Segall Bryant & Hamill LLC increased its stake in shares of Encompass Health by 26.6% in the first quarter. Segall Bryant & Hamill LLC now owns 187,701 shares of the company's stock worth $18,156,000 after acquiring an additional 39,445 shares during the last quarter. Arkadios Wealth Advisors raised its holdings in shares of Encompass Health by 9.4% during the first quarter. Arkadios Wealth Advisors now owns 12,797 shares of the company's stock worth $1,238,000 after acquiring an additional 1,102 shares in the last quarter. EverSource Wealth Advisors LLC raised its holdings in shares of Encompass Health by 11.3% during the first quarter. EverSource Wealth Advisors LLC now owns 5,757 shares of the company's stock worth $557,000 after acquiring an additional 585 shares in the last quarter. Finally, California State Teachers Retirement System boosted its position in Encompass Health by 23.5% during the first quarter. California State Teachers Retirement System now owns 117,714 shares of the company's stock valued at $11,386,000 after purchasing an additional 22,368 shares during the last quarter. Hedge funds and other institutional investors own 97.25% of the company's stock.

Encompass Health Company Profile

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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