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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Encompass Health Corporation (XNYS:EHC) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
EHC
Name:
ENCOMPASS HEALTH CORPORATION (XNYS:EHC)
Sector:
164.60M
Industry:
Medical Care Facilities
CEO:
Mr. Mark Tarr
Total Employees:
28,000
Our Technological Advancement Rating
Our Rating:
A+
Technological advancement compared to industry is 1001.05% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF ENCOMPASS HEALTH CORPORATION(EHC) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND MEDICAL CARE FACILITIES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
48.4
One Month Price Target:
$48.68
Six Month Price Target :
$50.09
Likely Price in One Year's Time:
Ticker:
$51.78
Likely Trading Range Today Under (Normal Volatility)
$48.23
Price Upper limit ($) :
$48.58
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$46.28
This week:
$43.66
This month :
$38.92
Other Primary facts
Market Cap:
4.82B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
99.78M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
11.%
-11.%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$58.24
$53.77
$38.56
$43.03
Medium risk (<10%) entry points
Buy Call
Sell Call
$52.31
Buy Put:
Sell Put:
$51.35
$44.48
$45.45
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
EHC
Sharpe Ratio:
-0.37%
Comparison:
EHC, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -116.61% lower than the industry
& is -116.21% lower than the market/S&P 500 average
Average Returns/Yield of
EHC
Daily returns:
0.00%
Weekly returns:
0.00%
Monthly returns:
0.02%
Yearly returns:
23.01%
Comparison of returns:
Average annual returns/yield (last 3 years) is -98.99% below industry average
Classification:
EHC, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.96
Statistical test of Returns:
EHC has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.13%
Weekly Volatility:
4.77%
Monthly Volatility:
9.53%
Yearly Volatility:
33.03%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.65%
Volatility in last five trading days has been -69.72% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.38%
Weekly VaR:
-9.79%
Monthly VaR:
-19.58%
How Much Can the price of
EHC
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-17%
Worst case (decline):
-67.82%
This translates to price declining to:
$40.02
This translates to price declining to:
$15.58
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
EHC is a 38.18% riskier investment compared to the market/S&P 500 & is 18.37% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -36.10% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
EHC
Beta in relation to market/S&P 500--1.04
Expected beta in 1 year's time:
0.773
Expected beta in 3 year's time:
1.093
Unlevered (debt free) Beta:
0.429
Beta in relation to Nasdaq (XNAS):
0.61
Beta in relation to all global stocks::
0.68
Beta Comparison & Analysis
Beta of competitors/peers::
1.237
Beta is -16.06% lower than peers
Average Industry Beta:
1.067
Beta is -2.71% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
16.81%
Sustainable growth rate is -53.30% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.100
Alpha is -179.90% below industry average alpha yield
Alpha is -638% below the market average
Analysis of Cost of Capital of
EHC
Equity cost of capital:
0.103
Equity cost of capital is -1.89% below industry mean WACC
Unlevered (without debt) cost of capital:
4.24%
Before-tax cost of debt:
4.56%
After-tax cost of debt:
3.60%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.60%
WACC is -4.71% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$52.36
Revenue growth rate per share of (3Y):
2.01
Annual revenue growth rate is -59.39% below industry average
EPS:
$3.91
Expected Annual growth rate of EPS (3Y):
3.95%
Expected future EPS growth rate is -70.64% lower than the Medical Care Facilities industry
Free cash flow (FCF) per share:
$2.01
Balance sheet equity growth per share: 10.27%
Equity growth rate per share is -194.84% lower than the industry
Debt per share
$34.65
EBITDA per share
$9.53
Valuation Analysis Today of
EHC
P/E Ratio:
14.8
P/E Ratio of Competitors/Peers:
12.34
P/E ratio is 20.00% higher than main peers & is -78.96% lower than the industry
Stock price/value with industry average P/E ratio: $275.12
EHC is -82.41% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $22.98
Present value of the expected future dividends only: $10.91
P/S (Price to Sales ratio):
0.92
Price to sales ratio is -56.35% below the industry mean
P/B (Price to book value ratio):
2.01
Price to free cash flow: 24.03
-
Net income growth rate (3Y):
39.45%
Net income growth rate is -74.30% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 28.64%
Dividend yeild: 2.31%
Previous Dividend: $0.28
Previous adjusted dividend: $0.28
Previous Dividend: $1.12
-
-
Average dividend payment (long-term): $0.28
Average dividend increase/decrease (growth rate) % per period: 0.00%
Expected next dividend payment date: 18/07/2022
Expected next dividend record date: 30/06/2022
Expected next dividend declaration date: 26/05/2022
Previous dividend payment date: 18/04/2022
Previous dividend record date: 04/01/2022
Previous dividend declaration date: 25/02/2022
Dividend History:
2022-03-31--$0.28
2021-09-30--$0.28
2021-03-31--$0.28
2021-12-31--$0.28
2021-06-30--$0.28
2021-01-01--$0.28
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
180.87%
Net debt to equity ratio:
182.25%
Debt to assets ratio:
50.36%
Net debt to assets ratio:
50.74%
Debt-to-asset ratio is -6.70% below industry average
Ability to repay debt:
Interest coverage ratio:
5.89
Interest coverage ratio is -70.43% less than industry average
Looking forward:
Debt growth rate:
-0.14%
Annual debt growth is -100% lower than industry average debt growth rate
Debt repayment rate in previous year: 8.75%
Analysis of Key Statistics
Correlation of price movement with the market:
0.629
Statistical significance of correlation:
EHC has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.432
Stock price is 45.65% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.432
Correlation of price movement with Nasdaq (^IXIC):
0.007
Covariance of price movement with the market:
0.009
Kurtosis
5.218
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.13
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
EHC
Gross Profit Margin Ratio:
384%
Operating Profit Margin Ratio:
14.98%
Operating profit margin is -309.73% lower than the industry
Net Profit Margin Ratio:
384%
Effective Tax Rate:
21.59%
Effective tax rate is -1.07% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
20.53%
Return on equity (ROE) is 15.10% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
5.72%
Return on assets (ROA) is 30.86% higher than the industry
Financial Leverage:
2.0x
Current Ratio:
1.23
Current ratio is -33.16% below industry average
Cash Conversion Cycle (days):
-191.5
Cash conversion cycle is -808.02% below industry average
The remaining useful life of property plant & equipment is: 4.5 years
Stock based compensation to net income ratio:
8.36%
In-depth Efficiency Analysis
Revenue generated per employee:
186.6K
Each employee generates -46% less revenue than industry average revenue per employee
EBITDA generated per employee:
33.9K
Each employee generates -38% less EBITDA than industry average revenue per employee
Profit generated per employee:
14.0K
Each employee generates -52% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
5.9K
Each employee generates -14% less free cash flow than industry average revenue per employee
Assets/Capital per employee
212.3K
Each employee generates -14% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
EHC
INSPIRE MEDICAL SYSTEMS, INC. (XNYS:INSP)
OAK STREET HEALTH, INC. (XNYS:OSH)
ENVISTA HOLDINGS CORPORATION (XNYS:NVST)
AMN HEALTHCARE SERVICES, INC. (XNYS:AMN)
PERRIGO COMPANY PUBLIC LIMITED COMPANY (XNYS:PRGO)
CHEMED CORPORATION (XNYS:CHE)
TENET HEALTHCARE CORPORATION (XNYS:THC)
Stevanato Group Spa (XNYS:STVN)
ORGANON & CO. (XNYS:OGN)
Current Analyst Ratings
Strong buy�0%
Buy�0%
Hold�0%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: -
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
5.22B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
213.50M
5.01B
-
3.26B
3.26B
-
965.30M
4.23B
-
161.40M
260.30M
950.40M
782.70M
392.40M
631.20M
136.30M
392.40M
Statement of Cash Flow
Date:
Period:
256.60M
Differed Income Tax :
27.80M
Stock Based Compensation :
32.80M
Change in Working Capital :
- 118000.00K
Accounts Receivables:
- 64300.00K
Other Working Capital:
172.60M
Other Non-Cash Items:
104.40M
Net Cash Provided by Operating Activities:
715.80M
Investments in PP&E:
- 528900.00K
Net Acquisitions:
- 118600.00K
Purchases of Investments:
- 9000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
12/31/21
2021
FY
54.80M
-
54.80M
680.30M
-
186.30M
921.40M
2.84B
2.43B
417.50M
-
-
254.50M
5.94B
-
6.86B
137.60M
81.20M
-
-
530.00M
748.80M
3.46B
173.20M
3.72B
-
4.47B
1.10M
141.80M
-
1.77B
December 31, 2021 at 12:00:00 AM
4.44B
1.91B
6.38B
-
3.54B
3.5B
-
- 9800.00K
- 666300.00K
- 331300.00K
-
-
- 112400.00K
203.60M
- 240100.00K
-
- 190600.00K
120.30M
310.90M
715.80M
- 551200.00K
164.60M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
EHC
2023
2024
2025
2026
2027
$59.94
$64.12
$68.60
$73.38
$78.50