雅虎香港財經 Encompass Health (EHC) Gains 30% in a Year: More Room to Run?
Shares of Encompass Health Corporation EHC have gained 30% in the past year compared with the industry’s 15.6% growth. The Medical sector and the S&P 500 composite index rose 5.4% and 26.5%, respectively, in the same time frame. With a market capitalization of $8.5 billion, the average volume of shares traded in the last three months was 0.7 million.
Increasing patient volumes and discharge growth, expanding healthcare facility network and strong financial health continue to propel Encompass Health's growth.
The leading rehabilitation hospital operator, presently carrying a Zacks Rank #2 (Buy), boasts an impressive track record of beating estimates in each of the trailing four quarters, the average surprise being 18.74%.
Return on equity in the trailing 12 months is currently pegged at 18%, which is higher than the industry’s average of 7.6%. This substantiates the company’s efficiency in utilizing shareholders’ funds.
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Can EHC Retain the Momentum?
The Zacks Consensus Estimate for EHC’s 2024 earnings is pegged at $4.10 per share, indicating an improvement of 12.6% from the year-earlier reading, while the same for revenues is $5.3 billion, implying a 10.5% increase from the prior-year actual.
The consensus mark for 2025 earnings is pegged at $4.57 per share, indicating 11.6% growth from the 2024 estimate. The same for revenues is $5.8 billion, which indicates a rise of 8.6% from the 2024 estimate.
Encompass Health’s revenue growth is driven by increasing patient volumes, a crucial factor for a healthcare facility operator's top line. Higher discharge growth also provides an impetus to the company’s revenues.
Management aims to witness a compound annual growth rate (CAGR) of 6-8% in discharges in the 2023-2027 period. It projects revenues to be between $5.25 billion and $5.325 billion in 2024, the mid-point of which suggests growth of 10.1% from the 2023 figure.
The performance of Encompass Health's sole operating unit, Inpatient Rehabilitation, is expected to remain strong, fueled by an aging U.S. population and robust demand for rehabilitation services that enable individuals to return to their daily lives.
Encompass Health pursues an active expansion strategy, frequently announcing plans to establish new inpatient rehabilitation hospitals across various U.S. communities and ensuring they become operational on time. Over the 2023-2027 period, each year, EHC plans to inaugurate six to 10 de novos and add 80 to 120 beds.
The company often collaborates with regional healthcare organizations through joint ventures, which help to understand and address the diverse healthcare needs of different regions effectively.
Encompass Health boasts an extensive network of inpatient rehabilitation hospitals across the United States. The opening of the Rehabilitation Hospital of Atlanta has increased its total number of hospitals nationwide to 162.
A strong financial position is essential for ongoing business investments, and Encompass Health exemplifies this with its growing cash reserves and robust cash-generating capabilities. As of Mar 31, 2024, the company’s cash and cash equivalents were $134.4 million, which surged 94.5% year over year. EHC also generated operating cash flows of $238.8 million in the first quarter.
Encompass Health boasts an impressive VGM Score of A. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Other Stocks to Consider
Some other top-ranked stocks in the Medical space are Organon & Co. OGN, LeMaitre Vascular, Inc. LMAT and Tenet Healthcare Corporation THC, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Organon’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters and missed the mark once, the average surprise being 13.62%. The Zacks Consensus Estimate for OGN’s 2024 earnings implies an improvement of 6.8% while the consensus mark for revenues indicates growth of 1.7% from the respective year-ago reported figures.
The consensus estimate for OGN’s earnings has moved 4.7% north in the past 60 days. Shares of Organon have gained 3.4% in the past year.
LeMaitre Vascular’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.12%. The Zacks Consensus Estimate for LMAT’s 2024 earnings indicates a rise of 31.1%, while the consensus mark for revenues implies an improvement of 11.3% from the corresponding year-ago reported estimates.
The consensus estimate for LMAT’s earnings has moved 6.6% north in the past 60 days. Shares of LeMaitre Vascular have gained 21% in the past year.
Tenet Healthcare’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 56.50%. The Zacks Consensus Estimate for THC’s 2024 earnings implies an improvement of 25.2% from the year-ago reported figure.
The Zacks Consensus Estimate for THC’s earnings has moved 3.8% north in the past 30 days. Shares of Tenet Healthcare have rallied 73.1% in the past year.
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