Compare Encompass Health Corporation (EHC) vs Fresenius Medical Care AG & Co. KGaA (FMS) Stock

Fresenius Medical Care AG & Co. KGaA (FMS) offers the better valuation at 11.8x trailing P/E (9.9x forward), making it the more compelling value choice. Analysts rate Encompass Health Corporation (EHC) a "Buy" — based on 26 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, Fresenius Medical Care AG & Co. KGaA (FMS) is the cheapest at 11.8x versus Encompass Health Corporation at 19.4x. On forward P/E, Fresenius Medical Care AG & Co. KGaA is actually cheaper at 9.9x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Encompass Health Corporation wins at 1.28x versus Fresenius Medical Care AG & Co. KGaA's 1.94x — a reasonable growth-adjusted valuation.

Over the past 5 years, Encompass Health Corporation (EHC) delivered a total return of +75.5%, compared to -22.8% for Fresenius Medical Care AG & Co. KGaA (FMS). A $10,000 investment in EHC five years ago would be worth approximately $18K today (assuming dividends reinvested). Over 10 years, the gap is even starker: EHC returned +312.9% versus FMS's -28.5%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), Fresenius Medical Care AG & Co. KGaA (FMS) is the lower-risk stock at 0.40β versus Encompass Health Corporation's 0.49β — meaning EHC is approximately 22% more volatile than FMS relative to the S&P 500. On balance sheet safety, Encompass Health Corporation (EHC) carries a lower debt/equity ratio of 8% versus 76% for Fresenius Medical Care AG & Co. KGaA — giving it more financial flexibility in a downturn.

Encompass Health Corporation (EHC) is the more profitable company, earning 9.5% net margin versus 5.0% for Fresenius Medical Care AG & Co. KGaA — meaning it keeps 9.5% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: EHC leads at 12.8% versus 9.3% for FMS. At the gross margin level — before operating expenses — EHC leads at 47.5%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential. By this metric, Encompass Health Corporation (EHC) is the more undervalued stock at a PEG of 1.28x versus Fresenius Medical Care AG & Co. KGaA's 1.94x. A PEG below 1.5 suggests fair-to-attractive pricing relative to expected growth. On forward earnings alone, Fresenius Medical Care AG & Co. KGaA (FMS) trades at 9.9x forward P/E versus 18.2x for Encompass Health Corporation — 8.3x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for EHC: 40.4% to $151.50.

In this comparison, EHC (0.6% yield) pays a dividend. FMS does not pay a meaningful dividend and should not be held primarily for income.

For long-horizon retirement investors, Encompass Health Corporation (EHC) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0.49), 0.6% yield, +312.9% 10Y return). Both have compounded well over 10 years (EHC: +312.9%, FMS: -28.5%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

Both stocks operate in the Healthcare sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both. In terms of investment character: EHC is a mid-cap quality compounder stock; FMS is a mid-cap deep-value stock. EHC pays a dividend while FMS does not, making them suitable for different income and tax situations. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.