MODEL VERDICT
Encompass Health Corporation (EHC) — Relative Valuation
Peer multiples, Monte Carlo simulation & quality-adjusted fair value
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Peer multiples, Monte Carlo simulation & quality-adjusted fair value
Composite score derived from valuation, quality, and risk factors
Quantitative model thresholds · For educational and research purposes only
Each row records the model's monthly assessment. High Conviction = the model detected notable undervaluation vs peers. Neutral = no notable divergence was found. The return column shows the actual price change over 90 days for reference. This is a quantitative observation log — not investment advice.
| Date | Assessment | Score | Price | Status | 90d Fwd Return |
|---|---|---|---|---|---|
| Feb 28, 2026 | NEUTRAL | 0.41 | $107.88 | CURRENT | — |
| Feb 21, 2026 | MODERATE | 0.61 | $106.55 | CURRENT | — |
| Feb 14, 2026 | MODERATE | 0.58 | $110.14 | CURRENT | — |
| Feb 11, 2026 | MODERATE | 0.56 | $109.00 | CURRENT | — |
| Jan 11, 2026 | MODERATE | 0.58 | $102.93 | Pending | +3.1% |
Historical model observations for research purposes only. Past quantitative patterns do not predict future results. Not a recommendation to buy, sell, or hold any security.
| Methodology | Fair Value | vs Current | Weight | Quality | Status |
|---|---|---|---|---|---|
| Forward P/E 26 analyst estimates | $100.98 | -6.4% | 20% | A- | Analyst Est. |
| EV/EBITDA 27 industry peers | $159.18 | +47.6% | 20% | A- | Peer Data |
| Industry Median P/E 20 industry peers | $110.29 | +2.2% | 15% | A | Peer Data |
| EV/EBIT 26 industry peers | $106.41 | -1.4% | 8% | B+ | Peer Data |
| Peg Ratio 11 industry peers | $88.10 | -18.3% | 5% | B | Data |
| EV To Revenue 31 industry peers | $81.03 | -24.9% | 4% | B | Data |
| Price / Sales 31 industry peers | $53.80 | -50.1% | 3% | B | Model Driven |
| Earnings Yield 21 industry peers | $120.87 | +12.0% | 2% | B | Data |
| Weighted Output Blended model output | $119.45 | +10.7% | 100% | 88 | SLIGHTLY UNDERVALUED |
| EPS Growth ↓ | P/E Multiple → | 15× | 17× | 19× (Current) | 21× | 23× |
|---|---|---|---|---|---|
| Bear Case (6%) | $88 | $100 | $111 | $123 | $135 |
| Conservative (9%) | $91 | $103 | $115 | $127 | $139 |
| Base Case (14.3%) | $95 | $108 | $121 | $133 | $146 |
| Bull Case (19%) | $99 | $112 | $126 | $139 | $152 |
Cross-sectional regression predicting expected multiples based on growth, margins, ROIC, and beta.
| Multiple | Avg | Median | Min | Max | Std |
|---|---|---|---|---|---|
| P/E Ratio | 18.88 | 19.23 | 12.63 | 23.07 | 3.74 |
| EV/EBIT | 14.07 | 13.35 | 12.09 | 18.41 | 2.25 |
| EV/EBITDA | 9.76 | 10.15 | 4.80 | 13.36 | 2.53 |
| P/FCF | 29.70 | 25.72 | 22.13 | 49.34 | 10.15 |
| P/FFO | 11.18 | 11.67 | 8.23 | 13.47 | 1.82 |
| P/TBV | 9.47 | 7.45 | 5.18 | 18.98 | 5.51 |
| P/AFFO | 81.59 | 75.92 | 31.59 | 157.91 | 41.92 |
| P/B Ratio | 3.01 | 3.23 | 2.17 | 3.31 | 0.42 |
| Div Yield | 0.01 | 0.02 | 0.01 | 0.02 | 0.01 |
| P/S Ratio | 1.53 | 1.41 | 1.19 | 1.84 | 0.27 |
Based on our peer multiples analysis with 21 valuation metrics, the model estimates EHC's fair value at $119.45 vs the current price of $107.88, implying +10.7% upside potential. Model verdict: Slightly Undervalued. Confidence: 88/100. This is a quantitative estimate, not a recommendation.
The blended fair value of $119.45 is calculated using four lenses: industry median multiples (40%), historical multiples (30%), forward estimates (20%), and quality-adjusted multiples (10%). Monte Carlo simulation (10,000 iterations) gives a range of $95.64 (P10) to $130.66 (P90), with a median of $113.04.
EHC's current P/E of 19.4x compares to the industry median of 19.9x (20 peers in the group). This represents a -2.2% discount to the industry. The historical average P/E is 18.9x over 7 years. Signal: Fair Value.
26 analysts cover EHC with a consensus rating of Buy. The consensus price target is $151.50 (range: $150.00 — $153.00), implying +40.4% upside from the current price. Grade breakdown: Strong Buy (1), Buy (20), Hold (4), Sell (1), Strong Sell (0).
The model confidence score is 88/100, based on: data completeness (21), peer quality (25), historical depth (20), earnings stability (12), and model agreement (10). Cyclicality penalty: -0 points. The model shows strong agreement across inputs.
The model flags several key risks: (1) Multiple compression: EHC trades at the 4500th percentile of its historical P/E range. A reversion to median (18.9×) would imply significant downside. (2) Macro/regulatory risks are not captured in this model but remain material.
Peak earnings risk refers to the possibility that EHC's current profitability is above its sustainable long-term trend. The model detects a margin Z-score of +0.8σ, meaning margins are 0.8 standard deviations above their historical average. If margins revert to the 7-year mean (8.2%), the model estimates fair value drops by 1430.0% to approximately $92. This isn't a prediction — it's a scenario analysis.
No. This dashboard is a quantitative research tool for educational and informational purposes only. It is not investment advice, a solicitation, or a recommendation to buy, sell, or hold any security. The operator of this platform is not a registered investment advisor (RIA), broker-dealer, or financial planner. All model outputs, fair value estimates, signals, and scenarios are the result of automated quantitative computations and should not be construed as professional financial guidance. You should consult a qualified, licensed financial advisor before making any investment decisions. Past model performance is not indicative of future results.