Encompass Health (EHC) Up 41% in a Year: More Room for Growth?
Shares of Encompass Health Corporation EHC have gained 41% in the past year against the industry’s 3.9% decline The Medical sector inched up 1.2% and the S&P 500 composite index rose 17.7% in the same time frame. With a market capitalization of $6.9 billion, the average volume of shares traded in the last three months was 0.5 million.
Expanding patient volumes, growing healthcare facility portfolio and a notable financial position continue to drive Encompass Health.
The leading rehabilitation hospital operator, presently sporting a Zacks Rank #1 (Strong Buy), has a decent track record of beating estimates in three of the trailing four quarters and missing the same once, the average beat being 14.04%.
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Return on equity in the trailing 12 months is currently pegged at 18.3%, which is higher than the industry’s average of 7.4%. This substantiates the company’s efficiency in utilizing shareholders’ funds.
Can EHC Retain the Momentum?
The Zacks Consensus Estimate for Encompass Health’s 2023 earnings is pegged at $3.45 per share, which implies an improvement of 21.1% from the 2022 reported figure. It has witnessed seven upward estimate revisions compared with none for 2023 earnings over the past 60 days.
The consensus estimate for 2024 earnings is pegged at $3.71 per share, which indicates a rise of 7.5% from the 2023 estimate.
Encompass Health’s revenues gain from expanding patient volumes, the most significant contributor to a healthcare facility operator’s top line. Its revenues improved 10.6% in the first half of 2023. Management forecasts it to lie within $4,750-$4,810 million in 2023, the midpoint of which suggests 9.9% growth from the 2022 figure.
The performance of the sole operating unit of EHC, Inpatient Rehabilitation, may continue to exhibit solid results in the days ahead due to an aging U.S. population and solid demand for effective rehabilitation services, which empower individuals to resume daily activities.
Encompass Health follows an active expansion strategy throughout the year pursuant to which it discloses plans to set up inpatient rehabilitation hospitals across different U.S. communities and makes them operable within a reasonable time period. For building hospitals, it also takes the help of several regional healthcare organizations by entering into joint ventures (JVs) with them and gains an in-depth knowledge of the diversified healthcare needs of a region.
EHC boasts an impressive count of inpatient rehabilitation hospitals across the United States. The latest addition is that of Rehabilitation Hospital of Columbus, a JV hospital between EHC and Piedmont, which took its nationwide hospital count to 159.
A solid financial position needs to be in place in order to pursue frequent business investments, which is exactly the case with Encompass Health. Growing cash reserves and adequate cash-generating abilities bear testament to its financial strength. Its cash and cash equivalents of $117.5 million increased more than five-fold from the 2022-end level as of Jun 30, 2023.
Encompass Health boasts an impressive VGM Score of B. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Other Stocks to Consider
Some other top-ranked stocks in the Medical space are LeMaitre Vascular, Inc. LMAT, IRadimed Corporation IRMD and Penumbra, Inc. PEN, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
LeMaitre Vascular’s earnings surpassed the Zacks Consensus Estimate in two of the last four quarters and missed the mark twice, the average beat being 2.27%. The Zacks Consensus Estimate for LMAT’s 2023 earnings suggests an improvement of 21.5% while the consensus mark for revenues indicates growth of 20.8% from the respective year-ago reported figures.
The consensus estimate for LMAT’s 2023 earnings has moved 8.3% north in the past 60 days. Shares of LeMaitre Vascular have gained 16.4% in the past year.
IRadimed’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.83%. The Zacks Consensus Estimate for IRMD’s 2023 earnings indicates a rise of 26.4%, while the consensus mark for revenues suggests an improvement of 22% from the corresponding year-ago reported estimates.
The consensus estimate for IRMD’s 2023 earnings has moved 6.1% north in the past 60 days. Shares of IRadimed have gained 50.4% in the past year.
Penumbra’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 94.24%. The consensus estimate for PEN’s 2023 earnings is pegged at $1.74 per share, which indicates an increase of nearly 11 fold from the prior-year reported figure. The consensus mark for revenues indicates growth of 25.1% from the year-ago reported figure.
The Zacks Consensus Estimate for PEN’s 2023 earnings has moved 11.5% north in the past 60 days. Shares of Penumbra have rallied 37.3% in the past year.
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LeMaitre Vascular, Inc. (LMAT) : Free Stock Analysis Report
iRadimed Corporation (IRMD) : Free Stock Analysis Report
Penumbra, Inc. (PEN) : Free Stock Analysis Report
Encompass Health Corporation (EHC) : Free Stock Analysis Report
