Encompass Health (NYSE:EHC) is making moves again, announcing new inpatient rehabilitation hospital projects in partnership with Vanderbilt Health in Tennessee and independently in Indiana. These expansions reflect the company's continued drive to grow its care network.
See our latest analysis for Encompass Health.
Shares of Encompass Health have gained notable ground this year, with a 26.5% year-to-date share price return signaling renewed optimism as the company moves forward with its strategic partnerships and network expansion. Momentum remains solid, helped by recent announcements and consistent long-term results. The stock has delivered a 13.6% total shareholder return over the past year and has more than doubled holders' money over three years.
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But with shares up sharply and market optimism running high, is Encompass Health still undervalued at current levels? Alternatively, has the market already priced in the company's ambitious growth plans and future potential?
Most Popular Narrative: 17.2% Undervalued
The market is pricing Encompass Health at $116.22 per share, but the most followed narrative suggests fair value is much higher. This has sparked debate about future growth and margins fueling this potential upside.
“Sustained execution of the company’s high-return de novo hospital and bed addition strategy, combined with a robust pipeline in underserved/new markets (and CON relaxation in key states), is set to drive outsized same-store and total discharge growth, translating to accelerating revenue and EBITDA expansion relative to market expectations.”
Curious what’s driving bullish expectations? Behind this narrative are aggressive assumptions on revenue expansion, operational leverage, and a margin profile few rivals can match. Discover the surprising projections and find out what gives Encompass Health its edge in the eyes of narrative followers.
Result: Fair Value of $140.33 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, persistent labor shortages or cost overruns in new facility investments could challenge Encompass Health’s bullish outlook and put pressure on its future performance.
Find out about the key risks to this Encompass Health narrative.
Build Your Own Encompass Health Narrative
If you see things differently or want to dig into the numbers yourself, you can craft your own narrative in just a few minutes. Do it your way.
A great starting point for your Encompass Health research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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