| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 56 | 20.2x | 17.3x | Around median | |
Growth | 74 | 9.5% | 7.1% | Top tier | |
Quality | 75 | 17.4% | 4.5% | Top tier | |
Safety | 67 | 1.8x | 2.6x | Top tier | |
Capital Return | 52 | 0.61% | 0.06% | Around median | |
Momentum | 81 | -2.0% | -1.6% | Top tier | |
Sentiment | 41 | 9 | 3 | Around median |
The floor: what the company is worth if growth stopped today
36% of today's price is what a buyer pays for growth that has not happened yet.
10-year US Treasury yield 4.96% as of 2026-10-22. Estimates computed from company data and analyst targets, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Encompass Health operates a network of inpatient rehabilitation hospitals and generates revenue by treating patients who qualify for this care, including stroke, brain injury, and medically complex cases. Its growth depends on increasing discharge volumes, raising net revenue per discharge, and adding new beds and hospitals; in Q2 FY2026, discharges rose 5.6% and net revenue per discharge increased 3.9%, supported by higher patient acuity.
In Q2 FY2026, Encompass Health reported revenue of $1.6 billion, net income of $153.9 million, and earnings per share of $1.54, equivalent to a calculated net income margin of approximately 9.6%. Year over year, revenue increased 9.6%, adjusted earnings before interest, taxes, depreciation, and amortization rose 9.2% to $348 million, and adjusted earnings per share increased 10.7%.
The business mix reflects a shift toward more complex cases; stroke and brain injury cases grew 7.9% and 8%, respectively, in Q2 FY2026, compared with growth of only approximately 1% for knee and hip replacements. Hospital occupancy also rose to 77.4%, up 290 basis points year over year, and average daily census exceeded 9,000 patients for the second consecutive quarter.
The average analyst price target is $150.25, within a range of $144 to $155, with a consensus rating of “Buy.” The average, lowest, and highest targets are all above the 52-week range high of $127.99, while the annual range extends from $92.77 to $127.99; the data do not include a valid earnings multiple that could be used to confirm or refute this valuation. The increase in FY2026 guidance supports the positive outlook, but the risks from Medicare Advantage denials, higher personnel costs, and elevated capital spending explain the need to treat analyst targets cautiously.
Figures in the text are as of 2026-08-29; the live price is shown at the top of the page.
Revenue increased 9.6% compared with Q2 FY2025, supported by 5.6% growth in discharges and a 3.9% increase in net revenue per discharge. The improvement in revenue per case came from higher patient acuity, particularly strokes and brain injuries, which grew 7.9% and 8%, respectively. Adjusted earnings before interest, taxes, depreciation, and amortization reached $348 million, up 9.2%, while net income was $153.9 million.
Management raised its guidance on August 6, 2026, and now expects net operating revenue of between $6.41 billion and $6.49 billion for FY2026. It also expects adjusted earnings before interest, taxes, depreciation, and amortization of between $1.365 billion and $1.395 billion, and adjusted earnings per share of between $6.02 and $6.25. The assumptions include growth in wages, salaries, and benefits per full-time equivalent employee of between 3.5% and 4%, and a net provider-tax benefit of approximately $10 million.
Automated analysis for informational purposes only — not investment advice.
The law governing inpatient rehabilitation care was repealed effective October 1, 2026, and Encompass Health views the state as a large, underserved market. The company identified 15 initial markets and placed three properties under contract, with its next hospital in the state expected to open in late 2028 or early 2029. The company operates one hospital in North Carolina in partnership with Novant and expects the new expansions to combine wholly owned facilities and joint ventures.
Supplemental labor costs, which include contract labor, sign-on bonuses, and shift incentives, declined by $2.6 million year over year to $25 million in Q2 FY2026. Contract employees represented 1.1% of total full-time equivalent employees, an improvement of 20 basis points from the corresponding quarter. This was the eleventh consecutive quarter in which supplemental labor costs declined year over year, but management cautioned that further improvements would be smaller as the metric approaches the point of diminishing returns.
Management said on August 6, 2026 that prior authorization denials by Medicare Advantage plans remained a challenge, with a substantial gap compared with fee-for-service Medicare patients. An admit-then-appeal program began in nine hospital markets in late February 2026, and the number of patients admitted through it reached 298 by the end of July 2026. Of the 144 fully resolved cases, the company won 128, or 89%, and it is evaluating the expansion of specific diagnostic categories before deciding whether to roll out the program broadly.