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    Encompass Health (EHC) Valuation Check After Recent Pullback and Ongoing Earnings Growth

    Simply Wall St·01/04/2026 23:23:14
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    Encompass Health (EHC) has quietly pulled back about 5% over the past month and roughly 14% in the past 3 months, even as earnings and revenue continue to grow at a steady clip.

    See our latest analysis for Encompass Health.

    That pullback sits against a much stronger backdrop, with Encompass Health’s 1 year total shareholder return of 17.4% and 3 year total shareholder return of 77.2% signaling that longer term momentum is still firmly intact, even as near term share price sentiment cools around $106.37.

    If Encompass Health’s steady gains have you rethinking where healthcare fits in your portfolio, this is a good moment to explore other potential leaders across healthcare stocks.

    With earnings still climbing and shares trading at a steep discount to analyst targets and intrinsic value, the real question now is whether Encompass Health is quietly undervalued or if the market has already priced in its next leg of growth.

    Most Popular Narrative: 24.2% Undervalued

    With Encompass Health last closing at $106.37 against a most popular narrative fair value near $140, the story hinges on sustained expansion and disciplined execution.

    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.

    Read the complete narrative.

    Curious how steady mid single digit volume gains could still justify a premium earnings multiple in a slower growth sector? The narrative leans on rising margins, compounding revenue, and a surprisingly rich future earnings multiple to back into that fair value. Want to see how those moving parts fit together and what needs to go right?

    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 and any shift toward lower cost rehabilitation models could pressure margins and undermine expectations for sustained, discharge-driven growth.

    Find out about the key risks to this Encompass Health narrative.

    Build Your Own Encompass Health Narrative

    If you see the numbers differently or want to stress test your own assumptions, you can spin up a personalized 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.

    Looking for more investment ideas?

    Before the market moves on without you, put your research momentum to work by scanning fresh opportunities across sectors, growth profiles, and dividend potential with powerful filters.

    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.