Encompass Health (EHC): Buy, Sell, or Hold Post Q2 Earnings? Radek Strnad Tue, October 13, 2026 at 10:43 AM EDT 3 min read EHC +0.24% ^GSPC -0.18% Trade EHC on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Encompass Health has followed the market's trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 15.7% to $124.41 per share while the index has gained 13.5%.
With a network of 161 specialized facilities across 37 states and Puerto Rico, Encompass Health (NYSE:EHC) operates inpatient rehabilitation hospitals that help patients recover from strokes, hip fractures, and other debilitating conditions.
If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
As you can see below, Encompass Health's margin expanded by 3.4 percentage points over the last five years. This is encouraging because it gives the company more optionality. Encompass Health's free cash flow margin for the trailing 12 months was 12.6%.
Growth gives us insight into a company's long-term potential, but how capital-efficient was that growth? A company's ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).
Encompass Health's five-year average ROIC was 15.8%, beating other healthcare companies by a wide margin. This illustrates its management team's ability to invest in attractive growth opportunities and produce tangible results for shareholders.
In addition to reported revenue, same-store sales are a useful data point for analyzing Outpatient & Specialty Care companies. This metric measures the change in sales at brick-and-mortar locations that have existed for at least a year, giving visibility into Encompass Health's underlying demand characteristics.
Over the last two years, Encompass Health's same-store sales averaged 4% year-on-year growth. This performance slightly lagged the sector and suggests it might have to change its strategy or pricing, which can disrupt operations.
Encompass Health's positive characteristics outweigh the negatives. At $124.41 per share (or 19.4× forward P/E), is now the time to initiate a position? See for yourself in our in-depth research report, it's free.
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