Encompass Health Exceeds Earnings Expectations: What’s Next for Investors?

Encompass Health (EHC) reported quarterly earnings of $1.03 per share, surpassing the Zacks Consensus Estimate of $0.94. This marks an increase from earnings of $0.86 per share in the same quarter last year. These results have been adjusted to exclude non-recurring items.

This earnings report reflects a surprise of 9.57%. In the previous quarter, the company had also exceeded expectations, with actual earnings of $1.11 per share against an anticipated $1.01, leading to a surprise of 9.90%.

Over the past four quarters, Encompass Health has consistently topped consensus earnings per share (EPS) estimates.

Strong Revenue Performance

Encompass Health, part of the Zacks Medical – Outpatient and Home Healthcare sector, reported revenue of $1.35 billion for the quarter ending September 2024. This figure exceeded the Zacks Consensus Estimate by 1.73% and shows a rise from last year’s revenue of $1.21 billion. The company has outperformed consensus revenue expectations three out of the last four quarters.

The stock’s short-term price movements will largely hinge on insights shared during the upcoming earnings call by management.

Since the start of the year, Encompass Health shares have surged approximately 40.1%, in contrast to the S&P 500’s gain of 21.8%.

What’s Next for Encompass Health?

As Encompass Health continues to perform well, investors are keen to know what lies ahead for the stock.

While there are no straightforward answers, the company’s earnings outlook is a reliable indicator. This outlook not only encompasses current consensus earnings estimates for upcoming quarters but also tracks any recent revisions.

Research indicates a significant relationship between short-term stock movements and earnings estimate revisions. Investors can monitor these changes independently or use the Zacks Rank tool, known for effectively predicting trends based on earnings estimate shifts.

Prior to this earnings announcement, the revisions trend for Encompass Health was positive. Though revisions may fluctuate following the latest earnings results, the current outlook supports a Zacks Rank of #2 (Buy) for the stock, signaling potential market outperformance in the near term. A full list of today’s Zacks #1 Rank (Strong Buy) stocks is available here.

It will be intriguing to see how future earnings estimates evolve in the coming days. The current consensus EPS estimate stands at $0.99, with projected revenues of $1.37 billion for the next quarter and $4.18 per share on $5.31 billion for the current fiscal year.

Industry Trends Affecting Performance

Investors should also consider that the broader industry outlook can significantly influence the stock’s performance. The Medical – Outpatient and Home Healthcare sector ranks within the top 13% of over 250 Zacks industries. Historical data shows that industries in the top half of the Zacks rankings are likely to outperform those in the lower half by a significant margin.

Additionally, The Pennant Group, Inc. (PNTG), another entity in the same sector, is scheduled to release its earnings report for September 2024 on November 6. It is expected to announce quarterly earnings of $0.23 per share, reflecting a 15% increase year-over-year. The consensus EPS estimate has remained stable over the last month.

Pennant’s anticipated revenues stand at $174.6 million, representing a 24.5% rise from the same quarter last year.

Should You Consider Investing in Encompass Health Corporation (EHC)?

Before deciding whether to invest in Encompass Health Corporation (EHC), consider looking into the seven best stocks recommended for purchase over the next 30 days, as suggested by Zacks Investment Research.

Since 1978, Zacks Investment Research has aimed to equip investors with essential tools and independent insights. Their stock-rating system, the Zacks Rank, has outperformed the S&P 500 with an average annual gain of +24.08%, covering data from January 1, 1988, to May 6, 2024.

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Encompass Health Corporation (EHC): Free Stock Analysis Report

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.