EHC
Encompass Health Corporation
$125.36
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 32.8% above fair value
You pay
$125.36
Bear
$75.54
Fair
$94.42
Bull
$113.30
Bear
$75.54
-39.7%
$5.54 × 14x P/E
Fair
$94.42
-24.7%
$5.54 × 17x P/E
Bull
$113.30
-9.6%
$5.54 × 20x P/E
Adjust Assumptions
17.0x
5.54$
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
22.6x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (27 analysts)
$150.20
Divergence from AlphaVal
37%
Summary
Applying a 17x P/E to adjusted EPS of $5.54, the base-case value is $94.42 per share.
Warnings
Wall Street's average price target is $150.20 (from 27 analysts). Our estimate is 37% 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