Encompass Health Corporation (EHC): fair value, margin of safety and Wheel Score

Is EHC undervalued?

EHC closed at 127.77 on 16 Oct 2026, which is 12% above the GLS average fair value of 114.09 from 9 models. 5 of them value the shares below today's price. Our screens read that as "no margin of safety": the stock is not a value candidate at this price, whatever the quality numbers say.

The 9 models disagree widely: DDM gives 11.48 while GLS Growth gives 290.93. A spread that wide means the average is sensitive to which methods you trust; the model table below shows where each one lands, and the Quote page lets you switch any of them off.

The nightly engine files EHC under High Growth: revenue and earnings growing fast enough that the growth-based models carry the valuation.

Nine valuation models for EHC

Each model turns the latest filed numbers into a value per share; the GLS fair value is the simple average of the ones that produce a positive number. The last two rows are shown for reference and never enter the average. The Quote page lets you switch any model off and add your own margin of safety.

Quality and financial health

On financial health EHC scores 7/9 (Piotroski): most of the nine tests - positive earnings and cash flow, falling debt, rising margins and turnover - are passed, which is the kind of balance sheet a wheel trader is happy to be assigned. The GLS Moat score is 7.3 out of 10: a ten-year record that is consistent in some of the metrics the score tracks (revenue, earnings, margins, cash flow, returns on capital) and patchy in others.

Returns on capital are moderate - ROIC 11.0%, ROE 23.2%, ROA 8.0% - with debt at 1.11 times equity and a free-cash-flow yield of 3.3%.

The dividend yield is 0.61% with a payout ratio of 12% - a small yield that leaves most of the earnings in the business. Revenue comes mainly from Medicare 82%, Managed Care 13%, Medicaid 4% (quarter Q2 FY2026).

Institutional ownership scores 10/10, insider activity 1/10 and Congressional trading 5/10 on the GLS smart-money scales.

Wheel Score 72: Good

EHC scores 72 out of 100 on the Wheel Score (Good band, 65-79). The score blends the margin of safety (Value, 8/25), Piotroski health (16/20), the GLS moat (11/15), the option premium on offer (20/20) and how easily the stock trades (18/20). Value (8/25) is the part holding the score back.

Implied volatility is 37% on the near-the-money contracts 20-60 days out - inside the 35-60% range the Wheel Score pays full marks for: enough premium to be worth selling, not so much that the risk is unpaid. Chain open interest is 3,171 contracts across all expiries - enough for the wheel at normal size.

Volume runs at 1.1M shares a day on a market cap of $12.6B, with a beta of 0.61 - a low beta, so day-to-day moves are smaller than the market's; the Stability part of the Wheel Score gives that 18 of 20.

The Wheel Score ranks ~7,400 US stocks for selling cash-secured puts and covered calls; it is updated nightly and is not a recommendation. The walkthrough lesson shows how the score fits into a trade, start to finish.

Upcoming events

Encompass Health Corporation reports earnings on 28 Oct 2026 (after the close) - inside the 14-day window the Sunday Scan avoids, because a put sold now would carry the report's gap risk.

Earnings, dividend, IPO, split and economic calendars for the whole market, filterable to your watchlists.

Similar stocks in Medical - Care Facilities

The 12 companies below are the closest to Encompass Health Corporation by market cap within the Medical - Care Facilities industry, each with its own fact sheet; the Compare page puts up to eight of them side by side.

⚖ Compare EHC with 7 of them   All Healthcare stocks →