HomeMost PopularInvestingEncompass Health (EHC) Up 41% in a Year: More Room for Growth?

Encompass Health (EHC) Up 41% in a Year: More Room for Growth?

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Over the past year, shares of Encompass Health Corporation (EHC) have seen an impressive 41% gain, outperforming the medical industry’s 3.9% decline. While the Medical sector saw a modest 1.2% increase and the S&P 500 composite index rose 17.7% during this period, Encompass Health has managed to shine.

The company’s success can be attributed to several factors, including expanding patient volumes, a growing portfolio of healthcare facilities, and a strong financial position. Encompass Health, the leading rehabilitation hospital operator, has consistently beaten earnings estimates, with an average beat of 14.04% in the past four quarters.

Encompass Health’s return on equity in the last 12 months stands at an impressive 18.3%, significantly higher than the industry average of 7.4%. This demonstrates the company’s efficient use of shareholders’ funds.

Can Encompass Health Sustain its Momentum?

Analysts are optimistic about Encompass Health’s future prospects. The Zacks Consensus Estimate for the company’s 2023 earnings suggests a 21.1% improvement from the 2022 figure. This estimate is based on seven upward revisions in the past 60 days.

In terms of revenue growth, Encompass Health has been benefiting from expanding patient volumes, which rose by 10.6% in the first half of 2023. The company’s management projects revenues to reach $4,750-$4,810 million in 2023, reflecting a 9.9% growth over the previous year.

The success of Encompass Health’s Inpatient Rehabilitation unit is expected to continue due to the rising demand for rehabilitation services among the aging U.S. population. The company also follows an active expansion strategy, establishing new hospitals and forming joint ventures with regional healthcare organizations, further expanding its reach and understanding of diverse healthcare needs.

Encompass Health boasts an impressive count of 159 inpatient rehabilitation hospitals across the United States. Its latest addition, the Rehabilitation Hospital of Columbus, brought valuable insights through a joint venture with Piedmont.

Thanks to its sound financial position, Encompass Health is well-positioned for continued growth. The company’s cash reserves have increased five-fold to $117.5 million as of June 30, 2023.

Encompass Health’s Value-Growth-Momentum (VGM) Score of B is proof of its attractiveness from an investment standpoint.

Additional Top Stocks to Keep an Eye On

LeMaitre Vascular, Inc. (LMAT), IRadimed Corporation (IRMD), and Penumbra, Inc. (PEN) are among the other top-ranked stocks in the Medical space, each with a Zacks Rank #1. These companies have shown promising growth potential and are worth considering for investment.

LeMaitre Vascular’s earnings have surpassed estimates in two of the last four quarters, with an average beat of 2.27%. The Zacks Consensus Estimate for LMAT’s 2023 earnings suggests a 21.5% improvement, indicating strong growth potential.

IRadimed Corporation has consistently outpaced earnings estimates in the past four quarters, with an average surprise of 12.83%. Analysts expect IRMD’s 2023 earnings to rise by 26.4%.

Penumbra has beaten earnings estimates in all four quarters, with an impressive average surprise of 94.24%. The consensus estimate for PEN’s 2023 earnings indicates an elevenfold increase from the prior year, illustrating substantial growth potential.

To access the latest recommendations from Zacks Investment Research, you can download their free report featuring the seven best stocks for the next 30 days.

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