Encompass Health (NYSE:EHC) Shares Gap Up After Better-Than-Expected Earnings

Shares of Encompass Health Corporation (NYSE:EHC) gapped up prior to trading on Friday following a stronger than expected earnings report. The stock had previously closed at $99.56, but opened at $115.00. Encompass Health shares last traded at $110.5260, with a volume of 194,168 shares.

The company reported $1.46 earnings per share for the quarter, beating analysts’ consensus estimates of $1.29 by $0.17. The company had revenue of $1.54 billion for the quarter, compared to the consensus estimate of $1.54 billion. Encompass Health had a return on equity of 18.50% and a net margin of 9.54%.The firm’s revenue for the quarter was up 9.9% compared to the same quarter last year. During the same quarter last year, the company earned $1.17 earnings per share. Encompass Health has set its FY 2026 guidance at 5.810-6.100 EPS.

Key Stories Impacting Encompass Health

Here are the key news stories impacting Encompass Health this week:

• Positive Sentiment: Q4 EPS beat — Encompass reported adjusted EPS of $1.46 vs. consensus $1.29, a clear beat that was the primary catalyst for the rally. Earnings Beat Article
• Positive Sentiment: Revenue growth and profitability — Revenue was $1.54B, up ~9.9% year-over-year; net margin (~9.33%) and ROE (~17.8%) show healthy operating leverage in the quarter. Those metrics reinforce the quality of the beat. PR News Release
• Positive Sentiment: FY2026 guidance issued — Management guided FY2026 EPS to $5.810–$6.100 and revenue to $6.4–$6.5B, broadly in line with Street expectations and giving investors a clear framework for 2026. That helped limit post-earnings uncertainty. Guidance Article
• Neutral Sentiment: Revenue met, not exceeded, estimates — while revenue grew y/y, the $1.54B figure was essentially in line with consensus, so the surprise was driven mainly by margin/earnings rather than top-line upside. Metrics vs Estimates
• Neutral Sentiment: Investor materials and call available — management provided a slide deck and held the conference call (transcript available) for additional color on volumes, payor mix and margin outlook; useful for modeling but no new headline surprises. Earnings Call Transcript
• Negative Sentiment: Guidance conservatism at the low end — the EPS guidance lower bound (5.810) is marginally below the consensus cited in some coverage (5.820); some traders may view the range as conservative, so watch guidance execution and quarterly cadence. Guidance Detail

Wall Street Analysts Forecast Growth

Several brokerages have weighed in on EHC. Zacks Research downgraded shares of Encompass Health from a “strong-buy” rating to a “hold” rating in a research note on Wednesday, November 19th. Raymond James Financial upgraded Encompass Health to a “strong-buy” rating in a report on Friday, October 31st. Barclays boosted their target price on Encompass Health from $150.00 to $153.00 and gave the stock an “overweight” rating in a research note on Friday. Finally, Wall Street Zen upgraded Encompass Health from a “hold” rating to a “buy” rating in a research note on Sunday, January 18th. Two investment analysts have rated the stock with a Strong Buy rating, seven have assigned a Buy rating and one has assigned a Hold rating to the company. According to MarketBeat.com, the company has an average rating of “Buy” and an average target price of $143.29.

Institutional Trading of Encompass Health

Hedge funds have recently modified their holdings of the stock. EverSource Wealth Advisors LLC raised its position in Encompass Health by 10.8% during the fourth quarter. EverSource Wealth Advisors LLC now owns 5,172 shares of the company’s stock valued at $549,000 after acquiring an additional 505 shares in the last quarter. Global Retirement Partners LLC increased its holdings in shares of Encompass Health by 2,468.6% during the 4th quarter. Global Retirement Partners LLC now owns 11,533 shares of the company’s stock valued at $1,224,000 after purchasing an additional 11,084 shares in the last quarter. Covestor Ltd lifted its stake in shares of Encompass Health by 24.4% in the 4th quarter. Covestor Ltd now owns 540 shares of the company’s stock valued at $57,000 after purchasing an additional 106 shares during the period. GSA Capital Partners LLP boosted its holdings in Encompass Health by 87.0% during the fourth quarter. GSA Capital Partners LLP now owns 14,353 shares of the company’s stock worth $1,523,000 after buying an additional 6,676 shares in the last quarter. Finally, Handelsbanken Fonder AB grew its position in Encompass Health by 22.2% during the fourth quarter. Handelsbanken Fonder AB now owns 29,753 shares of the company’s stock valued at $3,158,000 after buying an additional 5,400 shares during the period. Hedge funds and other institutional investors own 97.25% of the company’s stock.

Encompass Health Stock Up 6.0%

The business’s fifty day simple moving average is $104.26 and its two-hundred day simple moving average is $114.45. The company has a debt-to-equity ratio of 0.76, a current ratio of 1.14 and a quick ratio of 1.14. The company has a market cap of $10.62 billion, a PE ratio of 19.05, a PEG ratio of 1.70 and a beta of 0.73.

About Encompass Health

Encompass Health Corporation is a leading provider of post‐acute healthcare services in the United States, operating a comprehensive network of inpatient rehabilitation hospitals and home health and hospice agencies. Its inpatient rehabilitation hospitals offer intensive therapy programs for patients recovering from conditions such as stroke, brain injury, spinal cord injury, cardiac and pulmonary disorders, and orthopedic procedures. Through its home health segment, Encompass Health delivers skilled nursing, physical therapy, occupational therapy and speech therapy to patients in the comfort of their homes, while its hospice services provide end‐of‐life care focused on symptom management and emotional support for patients and families.

Founded in 1984 as HealthSouth Corporation and rebranded as Encompass Health in 2018, the company has grown organically and through acquisitions to serve patients across more than 30 states.