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Encompass Health (EHC) Hits Fresh Highs: Is There Still Room to Run?
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Have you been paying attention to shares of Encompass Health Corporation (EHC - Free Report) ? Shares have been on the move with the stock up 9.87% over the past month. EHC hit a new 52-week high of $57.04 in the previous session. Encompass Health has gained 15.38% since the start of the year compared to the 2.26% move for the Medical sector and the 7.17% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on February 26, 2018, Encompass Health reported EPS of $0.7 versus the Zacks Consensus of $0.66 while it beat the consensus revenue estimate by 1.72%.
For the current fiscal year, Encompass Health is expected to post earnings of $3.29 per share on $4.19 billion in revenues. This represents a 19.2% change in EPS on a 5.45% change in revenues. For the next fiscal year, the company is expected to earn $3.65 per share on $4.45 billion in revenues. This represents changes of 10.98% and 6.2%, respectively.
Valuation Metrics
Encompass Health may be at a 52-week high right now, but what might the future hold for EHC? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Encompass Health has a Value Score of B. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 17.33x current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 12.30x versus its peer group's average of 13.60x. Additionally, the stock has a PEG ratio of 1.39. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Encompass Health currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 or 2 (Buy) and Style Scores of A or B, it looks as if Encompass Health passes the test. Thus, it seems as though EHC shares could have potential in the weeks and months to come.
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Encompass Health (EHC) Hits Fresh Highs: Is There Still Room to Run?
Have you been paying attention to shares of Encompass Health Corporation (EHC - Free Report) ? Shares have been on the move with the stock up 9.87% over the past month. EHC hit a new 52-week high of $57.04 in the previous session. Encompass Health has gained 15.38% since the start of the year compared to the 2.26% move for the Medical sector and the 7.17% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on February 26, 2018, Encompass Health reported EPS of $0.7 versus the Zacks Consensus of $0.66 while it beat the consensus revenue estimate by 1.72%.
For the current fiscal year, Encompass Health is expected to post earnings of $3.29 per share on $4.19 billion in revenues. This represents a 19.2% change in EPS on a 5.45% change in revenues. For the next fiscal year, the company is expected to earn $3.65 per share on $4.45 billion in revenues. This represents changes of 10.98% and 6.2%, respectively.
Valuation Metrics
Encompass Health may be at a 52-week high right now, but what might the future hold for EHC? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Encompass Health has a Value Score of B. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 17.33x current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 12.30x versus its peer group's average of 13.60x. Additionally, the stock has a PEG ratio of 1.39. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Encompass Health Corporation Price and Consensus
Encompass Health Corporation Price and Consensus | Encompass Health Corporation Quote
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Encompass Health currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 or 2 (Buy) and Style Scores of A or B, it looks as if Encompass Health passes the test. Thus, it seems as though EHC shares could have potential in the weeks and months to come.