EHC
Encompass Health Corporation
$104.96
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 5.0% below fair value
You pay
$104.96
Bear
$88.39
Fair
$110.48
Bull
$132.58
Bear
$88.39
-15.8%
$5.79 × 14x P/E
Fair
$110.48
+5.3%
$5.79 × 17x P/E
Bull
$132.58
+26.3%
$5.79 × 20x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
18.1x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $146.00 from 26 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $110.48 per share.
Warnings
Wall Street's average price target is $146.00 (from 26 analysts). Our estimate is 32% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples