Comprehensive Stock Comparison
Compare Select Medical Holdings Corporation (SEM) vs Encompass Health Corporation (EHC) Stock
Analyze side-by-side fundamentals, valuation, growth, and profitability to decide which stock is the better buy.
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Quick Verdict
| Category | Winner | Why |
|---|---|---|
| Growth | EHC | 10.5% revenue growth vs SEM's 5.1% |
| Value | SEM | Lower P/E (12.0x vs 18.2x) |
| Quality / Margins | EHC | 9.3% net margin vs SEM's 2.8% |
| Stability / Safety | EHC | Beta 0.49 vs SEM's 0.72, lower leverage |
| Dividends | SEM | 1.7% yield, vs EHC's 0.6% |
| Momentum (1Y) | EHC | +8.4% vs SEM's -16.3% |
| Efficiency (ROA) | EHC | 7.9% ROA vs SEM's 1.9%, ROIC 12.7% vs 0.0% |
Who Each Stock Is For
Income & stability
Growth exposure
Long-term compounding (10Y)
Sleep-well-at-night portfolio
Defensive / Recession hedge
Business Model
What each company does and how it makes money
Select Medical operates a network of specialized healthcare facilities including critical illness recovery hospitals, rehabilitation hospitals, outpatient clinics, and occupational health centers across the United States. It generates revenue primarily from patient care services—roughly 60% from its critical illness and rehabilitation hospital segments and 40% from outpatient and occupational health services—with most payments coming from government programs like Medicare and private insurers. The company's competitive advantage lies in its specialized, post-acute care focus and geographic network density that creates referral relationships with acute-care hospitals.
Encompass Health operates a network of inpatient rehabilitation hospitals and home health/hospice services across the United States. It generates revenue primarily from Medicare reimbursements for its inpatient rehabilitation services — which account for the majority of its business — supplemented by home health and hospice care payments. The company's competitive advantage lies in its scale as the largest owner and operator of inpatient rehabilitation facilities in the country, creating operational efficiencies and referral network advantages.
Revenue Breakdown by Segment
How each company's revenue is distributed across its business units
Financial Metrics Comparison
Side-by-side fundamentals across 2 stocks. BestLagging
Financial Scorecard
EHC leads in 4 of 6 categories (Financial Metrics, Profitability & Efficiency). SEM leads in 1 (Valuation Metrics). 1 tied.
Financial Metrics (TTM)
EHC and SEM operate at a comparable scale, with $5.8B and $3.9B in trailing revenue. EHC is the more profitable business, keeping 9.3% of every revenue dollar as net income compared to SEM's 2.8%. On growth, EHC holds the edge at +9.4% YoY revenue growth, suggesting stronger near-term business momentum.
| Metric | SEMSelect Medical Ho… | EHCEncompass Health … |
|---|---|---|
| RevenueTrailing 12 months | $3.9B | $5.8B |
| EBITDAEarnings before interest/tax | $197M | $1.3B |
| Net IncomeAfter-tax profit | $110M | $541M |
| Free Cash FlowCash after capex | $174M | $403M |
| Gross MarginGross profit ÷ Revenue | +8.2% | +43.8% |
| Operating MarginEBIT ÷ Revenue | +1.2% | +17.3% |
| Net MarginNet income ÷ Revenue | +2.8% | +9.3% |
| FCF MarginFCF ÷ Revenue | +4.4% | +6.9% |
| Rev. Growth (YoY)Latest quarter vs prior year | -22.6% | +9.4% |
| EPS Growth (YoY)Latest quarter vs prior year | -46.5% | +17.0% |
Valuation Metrics
At 12.9x trailing earnings, SEM trades at a 34% valuation discount to EHC's 19.4x P/E. On an enterprise value basis, EHC's 10.1x EV/EBITDA is more attractive than SEM's 20.3x.
| Metric | SEMSelect Medical Ho… | EHCEncompass Health … |
|---|---|---|
| Market CapShares × price | $1.9B | $10.8B |
| Enterprise ValueMkt cap + debt − cash | $2.9B | $11.0B |
| Trailing P/EPrice ÷ TTM EPS | 12.91x | 19.44x |
| Forward P/EPrice ÷ next-FY EPS est. | 12.04x | 18.22x |
| PEG RatioP/E ÷ EPS growth rate | — | 1.36x |
| EV / EBITDAEnterprise value multiple | 20.26x | 10.09x |
| Price / SalesMarket cap ÷ Revenue | 0.34x | 1.82x |
| Price / BookPrice ÷ Book value/share | 0.91x | 3.37x |
| Price / FCFMarket cap ÷ FCF | 4.84x | — |
Profitability & Efficiency
EHC delivers a 17.0% return on equity — every $100 of shareholder capital generates $17 in annual profit, vs $5 for SEM. EHC carries lower financial leverage with a 0.08x debt-to-equity ratio, signaling a more conservative balance sheet compared to SEM's 0.51x. On the Piotroski fundamental quality scale (0–9), EHC scores 7/9 vs SEM's 6/9, reflecting strong financial health.
| Metric | SEMSelect Medical Ho… | EHCEncompass Health … |
|---|---|---|
| ROE (TTM)Return on equity | +5.5% | +17.0% |
| ROA (TTM)Return on assets | +1.9% | +7.9% |
| ROICReturn on invested capital | +0.0% | +12.7% |
| ROCEReturn on capital employed | +0.0% | +12.7% |
| Piotroski ScoreFundamental quality 0–9 | 6 | 7 |
| Debt / EquityFinancial leverage | 0.51x | 0.08x |
| Net DebtTotal debt minus cash | $1.0B | $195M |
| Cash & Equiv.Liquid assets | $27M | $72M |
| Total DebtShort + long-term debt | $1.0B | $267M |
| Interest CoverageEBIT ÷ Interest expense | 1.12x | 8.12x |
Total Returns (with DRIP)
A $10,000 investment in EHC five years ago would be worth $17,548 today (with dividends reinvested), compared to $9,138 for SEM. Over the past 12 months, EHC leads with a +8.4% total return vs SEM's -16.3%. The 3-year compound annual growth rate (CAGR) favors EHC at 24.8% vs SEM's 2.5% — a key indicator of consistent wealth creation.
| Metric | SEMSelect Medical Ho… | EHCEncompass Health … |
|---|---|---|
| YTD ReturnYear-to-date | +1.0% | +1.6% |
| 1-Year ReturnPast 12 months | -16.3% | +8.4% |
| 3-Year ReturnCumulative with dividends | +7.6% | +94.3% |
| 5-Year ReturnCumulative with dividends | -8.6% | +75.5% |
| 10-Year ReturnCumulative with dividends | +208.0% | +312.9% |
| CAGR (3Y)Annualised 3-year return | +2.5% | +24.8% |
Risk & Volatility
EHC is the less volatile stock with a 0.49 beta — it tends to amplify market swings less than SEM's 0.72 beta. A beta below 1.0 means the stock typically moves less than the S&P 500. EHC currently trades 84.3% from its 52-week high vs SEM's 80.4% drawdown — a narrower gap to the peak suggests stronger recent price momentum.
| Metric | SEMSelect Medical Ho… | EHCEncompass Health … |
|---|---|---|
| Beta (5Y)Sensitivity to S&P 500 | 0.72x | 0.49x |
| 52-Week HighHighest price in past year | $18.61 | $127.99 |
| 52-Week LowLowest price in past year | $11.65 | $92.53 |
| % of 52W HighCurrent price vs 52-week peak | +80.4% | +84.3% |
| RSI (14)Momentum oscillator 0–100 | 40.0 | 55.6 |
| Avg Volume (50D)Average daily shares traded | 608K | 1.1M |
Analyst Outlook
Wall Street rates SEM as "Buy" and EHC as "Buy". Consensus price targets imply 40.4% upside for EHC (target: $152) vs 20.2% for SEM (target: $18). For income investors, SEM offers the higher dividend yield at 1.69% vs EHC's 0.64%.
| Metric | SEMSelect Medical Ho… | EHCEncompass Health … |
|---|---|---|
| Analyst RatingConsensus buy/hold/sell | Buy | Buy |
| Price TargetConsensus 12-month target | $18.00 | $151.50 |
| # AnalystsCovering analysts | 13 | 26 |
| Dividend YieldAnnual dividend ÷ price | +1.7% | +0.6% |
| Dividend StreakConsecutive years of raises | 0 | 2 |
| Dividend / ShareAnnual DPS | $0.25 | $0.70 |
| Buyback YieldShare repurchases ÷ mkt cap | +5.4% | +1.5% |
Historical Charts
Charts are rendered on first load. Hover for details.
Chart 1Total Return — 5 Years (Rebased to 100)
| Stock | Mar 20 | Feb 26 | Change |
|---|---|---|---|
| Select Medical Hold… (SEM) | 100 | 113.73 | +13.7% |
| Encompass Health Co… (EHC) | 100 | 154.17 | +54.2% |
Encompass Health Co… (EHC) returned +75% over 5 years vs Select Medical Hold… (SEM)'s -9%. A $10,000 investment in EHC 5 years ago would be worth $17,548 today (including dividends reinvested).
Chart 2Revenue Growth — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Select Medical Hold… (SEM) | $4.3B | $5.5B | +27.2% |
| Encompass Health Co… (EHC) | $3.6B | $5.9B | +62.9% |
Select Medical Holdings Corporation's revenue grew from $4.3B (2016) to $5.5B (2025) — a 2.7% CAGR. Encompass Health Corporation's revenue grew from $3.6B (2016) to $5.9B (2025) — a 5.6% CAGR.
Chart 3Net Margin Trend — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Select Medical Hold… (SEM) | 2.7% | 2.7% | -0.4% |
| Encompass Health Co… (EHC) | 6.8% | 9.5% | +40.3% |
Select Medical Holdings Corporation's net margin went from 3% (2016) to 3% (2025). Encompass Health Corporation's net margin went from 7% (2016) to 10% (2025).
Chart 4P/E Ratio History — 9 Years
| Stock | 2017 | 2025 | Change |
|---|---|---|---|
| Select Medical Hold… (SEM) | 10.9 | 12.8 | +17.4% |
| Encompass Health Co… (EHC) | 14.6 | 19.1 | +30.8% |
Select Medical Holdings Corporation has traded in a 5x–13x P/E range over 9 years; current trailing P/E is ~13x. Encompass Health Corporation has traded in a 13x–23x P/E range over 9 years; current trailing P/E is ~19x.
Chart 5EPS Growth — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Select Medical Hold… (SEM) | 0.87 | 1.16 | +33.3% |
| Encompass Health Co… (EHC) | 2.59 | 5.55 | +114.3% |
Select Medical Holdings Corporation's EPS grew from $0.87 (2016) to $1.16 (2025) — a 3% CAGR. Encompass Health Corporation's EPS grew from $2.59 (2016) to $5.55 (2025) — a 9% CAGR.
Chart 6Free Cash Flow — 5 Years
Select Medical Holdings Corporation generated $383M FCF in 2025 (+73% vs 2021). Encompass Health Corporation generated $-738M FCF in 2025 (-548% vs 2021).
SEM vs EHC: Frequently Asked Questions
9 questions · data-driven answers · updated daily
01Is SEM or EHC a better buy right now?
Select Medical Holdings Corporation (SEM) offers the better valuation at 12.9x trailing P/E (12.0x forward), making it the more compelling value choice. Analysts rate Select Medical Holdings Corporation (SEM) a "Buy" — based on 13 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.
02Which has the better valuation — SEM or EHC?
On trailing P/E, Select Medical Holdings Corporation (SEM) is the cheapest at 12.9x versus Encompass Health Corporation at 19.4x. On forward P/E, Select Medical Holdings Corporation is actually cheaper at 12.0x.
03Which is the better long-term investment — SEM or EHC?
Over the past 5 years, Encompass Health Corporation (EHC) delivered a total return of +75.5%, compared to -8.6% for Select Medical Holdings Corporation (SEM). 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 SEM's +208.0%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.
04Which is safer — SEM or EHC?
By beta (market sensitivity over 5 years), Encompass Health Corporation (EHC) is the lower-risk stock at 0.49β versus Select Medical Holdings Corporation's 0.72β — meaning SEM is approximately 48% more volatile than EHC relative to the S&P 500. On balance sheet safety, Encompass Health Corporation (EHC) carries a lower debt/equity ratio of 8% versus 51% for Select Medical Holdings Corporation — giving it more financial flexibility in a downturn.
05Which has better profit margins — SEM or EHC?
Encompass Health Corporation (EHC) is the more profitable company, earning 9.5% net margin versus 2.7% for Select Medical Holdings Corporation — 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 0.0% for SEM. 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.
06Is SEM or EHC more undervalued right now?
On forward earnings alone, Select Medical Holdings Corporation (SEM) trades at 12.0x forward P/E versus 18.2x for Encompass Health Corporation — 6.2x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for EHC: 40.4% to $151.50.
07Which pays a better dividend — SEM or EHC?
All stocks in this comparison pay dividends. Select Medical Holdings Corporation (SEM) offers the highest yield at 1.7%, versus 0.6% for Encompass Health Corporation (EHC).
08Is SEM or EHC better for a retirement portfolio?
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%, SEM: +208.0%), 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.
09What are the main differences between SEM and EHC?
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: SEM is a small-cap deep-value stock; EHC is a mid-cap quality compounder stock. 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.
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