* Note: Prices are in Million (M) USD.
Description:
Encompass Health Corporation offers in-home and post-acute health care services in the United States. The company is headquartered in Birmingham, Alabama.
These criteria used Company's Cash, EBITDA and Debt balance to determines its fair value:
Cash : $99 M
Debt : $365 M
EBITDA : $1,306 M
Net Debt (Debt - Cash): $266 M
Since Net Debt is covered by EBITDA within 1 year, 3 points assigned.
This criteria used industry in which company operates:
Sector: Healthcare
Industry: Medical care
Based on industry, 3 points assigned.
This criteria used Company's Price To Earning (P/E) Ratio to determines its fair value:
Forward PE Ratio: 21.51
Since Forward PE Ratio is between 20 - 25, 2 points assigned.
This criteria used Company's ability to convert Sales into free cash flow to determine fair value:
Using last 20 overlapping fiscal years (max 20).Average Free Cash Flow: $235 M
Average Revenue: $3,243 M
Revenue Converted To Free Cash Flow (%): 7.2%
Since Free Cash Flow (FCF) to Revenue percentage is less than 15, 1 point assigned.
This criteria used company's growth potential to calculate its fair value:
Latest Revenue (2024-12-31): $5,373 M
Revenue 4 Years Ago (2020-12-31): $4,644 M
Last 5 Years Average Revenue Growth: 3%
Since Revenue Growth is between 0 - 5, 1 point assigned.
This criteria used Company's ability to buy back its own share:
Latest Share Count (2024-12-31): $102 M
Share Count 5 Years Ago (2020-12-31): $100 M
Company is not buying back its own shares, 0 points assigned.
This criteria used Company's dividend payout ratio to determine its fair value:
Next Year Earnings Per Share (EPS): $6.20
Trailing 12-Month Earnings Per Share (EPS): $5.28
Average Earnings Per Share (EPS): $5.74
Dividend Per Share (DPS): $1
Payout Ratio: 12%
Dividend Yield: 1%
Since company Payout Ratio is less than 50, 2 points assigned.
Since Dividend Yield is less than 1, 0 point assigned.
This criteria used Company's Return On Equity (ROE%) to determine its fair value:
Using last 14 valid ROE years (max 20).Average ROE: 39.9%
Since Average ROE is greater than 20, 5 points assigned.
This criteria used Company's current price to its 52 week low price to determines its fair value:
Current Price: $123
52-Week Low: $88
Threshold Price (15% Above 52-Week Low): $101
Since Current price is not within 15% threshold, 0 point assigned.
This criteria used Company's Market Cap to determines its fair value:
Market Capitalization: $12,447 M
Since Market Cap is between 10B - 100B, 2 points assigned.
% Exposure to Total Portfolio
Based on the market cap, we recommend do not exceed 3% exposure of Total Portfolio.
Value-Trade has assigned 19 points to above Encompass Health Corp (EHC) stock.
Heads up: One or more P/E inputs look exaggerated and may skew the blend.
• ROE Based PE
41.89 (>2× median)
Further research is recommended; please use your own due diligence.In such cases, multiplying earnings by the long-run average P/E typically gives a closer, more reliable fair value.
Rule of thumb: Last 7 Years Avg P/E (19.36)
× EPS ($5.74) = $111.13.
Last 7 Years Avg PE 19.36, Fair Value PE 12, Industry Based PE 15, Growth Based PE 3, RCFC Based PE 15.8, ROE Based PE 41.89, Risk-Free Anchored PE (25% MoS) 17.08. Based on these 7 values, average assigned is 17.73. Value-Trades has assined P/E value 17.73. Since an average (Current Year EPS + Next Year EPS) earning per share is $5.74.
The fair value of Encompass Health Corp (EHC) stock should be (17.73 x $5.74) = $101.79.
