Are Investors Undervaluing Encompass Health (EHC) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Encompass Health (EHC) is a stock many investors are watching right now. EHC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 19.47, which compares to its industry's average of 28.97. EHC's Forward P/E has been as high as 21.45 and as low as 10.77, with a median of 16.53, all within the past year.
Investors should also note that EHC holds a PEG ratio of 1.39. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. EHC's industry has an average PEG of 2.27 right now. Over the past 52 weeks, EHC's PEG has been as high as 2.93 and as low as 1.16, with a median of 2.09.
Finally, investors should note that EHC has a P/CF ratio of 11.96. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. EHC's current P/CF looks attractive when compared to its industry's average P/CF of 33.46. Over the past year, EHC's P/CF has been as high as 12.15 and as low as 7.69, with a median of 10.09.
These are just a handful of the figures considered in Encompass Health's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that EHC is an impressive value stock right now.
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Encompass Health Corporation (EHC) : Free Stock Analysis Report
