Encompass Health has just opened its newest inpatient rehabilitation hospital in St. Petersburg, bringing the company’s total number of Florida locations to 25. This move reflects Encompass Health’s strategy of expanding its footprint by opening specialized care facilities across the state.
See our latest analysis for Encompass Health.
Encompass Health’s momentum is showing up not just in new facilities but also in its numbers; the company’s 37% year-to-date share price return is a reflection of shifting sentiment and renewed growth expectations. The one-year total shareholder return of nearly 36% underscores that both recent and long-term investors have seen significant gains. Recent business expansion and dividend affirmations have also contributed to the positive outlook.
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But with such robust expansion and strong shareholder returns already in play, the crucial question becomes whether Encompass Health’s stock is undervalued at these levels, or if the market has already factored in years of future growth.
With the most current narrative estimating Encompass Health’s fair value at $139.08, compared to the last close of $126.13, valuation appears supportive for further upside if their forecasted momentum plays out. This perspective weighs future revenue, profit margin expansion, and sustained growth initiatives in justifying the company’s pricing power and runway.
The surge in the 65-plus population and persistent undersupply of inpatient rehabilitation beds are driving high and still-unmet demand for Encompass Health’s core services. Ongoing hospital openings and bed expansions position the company to capture significant incremental patient volume, supporting higher revenue growth for years to come.
Curious what profit margins and growth expectations actually sit beneath this narrative’s confident outlook? The full narrative reveals an earnings forecast and industry assumptions that may surprise you. Can strong sector tailwinds really justify this bold valuation?
Result: Fair Value of $139.08 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, persistent labor shortages and the threat of disruptive care models remain real risks that could challenge the growth and profitability assumptions for Encompass Health.
Find out about the key risks to this Encompass Health narrative.
While a narrative-based valuation points to upside, Encompass Health’s price-to-earnings ratio stands at 24.3x. This figure is higher than both the US Healthcare industry average of 21.6x and its peer group’s 17.9x. The fair ratio estimate is also 21.6x, suggesting that investors may face valuation risk if expectations cool. Could the market re-rate if growth slows, or will Encompass Health continue to justify its premium?
See what the numbers say about this price — find out in our valuation breakdown.
NYSE:EHC PE Ratio as at Oct 2025
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A great starting point for your Encompass Health research is our analysis highlighting 3 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.
Companies discussed in this article include EHC.
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