Comparing Extendicare (OTCMKTS:EXETF) & Encompass Health (NYSE:EHC)

Extendicare (OTCMKTS:EXETF) and Encompass Health (NYSE:EHC) are both healthcare companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.

Insider and Institutional Ownership

9.4% of Extendicare shares are held by institutional investors. Comparatively, 97.3% of Encompass Health shares are held by institutional investors. 1.8% of Encompass Health shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Extendicare pays an annual dividend of $0.48 per share and has a dividend yield of 2.1%. Encompass Health pays an annual dividend of $0.76 per share and has a dividend yield of 0.6%. Extendicare pays out -185.0% of its earnings in the form of a dividend. Encompass Health pays out 12.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Encompass Health has raised its dividend for 2 consecutive years. Extendicare is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Extendicare and Encompass Health’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Extendicare	N/A	N/A	N/A
Encompass Health	10.01%	18.08%	8.22%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Extendicare and Encompass Health, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Extendicare	0	0	5	0	3.00
Encompass Health	0	1	7	1	3.00

Encompass Health has a consensus price target of $148.71, indicating a potential upside of 22.93%. Given Encompass Health’s higher probable upside, analysts plainly believe Encompass Health is more favorable than Extendicare.

Earnings & Valuation

This table compares Extendicare and Encompass Health”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Extendicare	N/A	N/A	N/A	($0.26)	-88.25
Encompass Health	$5.94 billion	2.01	$566.20 million	$6.14	19.70

Encompass Health has higher revenue and earnings than Extendicare. Extendicare is trading at a lower price-to-earnings ratio than Encompass Health, indicating that it is currently the more affordable of the two stocks.

Summary

Encompass Health beats Extendicare on 12 of the 14 factors compared between the two stocks.

About Extendicare

Extendicare Inc., through its subsidiaries, provides care and services for seniors in Canada. The company offers long term care (LTC) services; and home health care services, such as nursing care, occupational, physical and speech therapy, and assistance with daily activities, as well as management, consulting, and other services to third parties. It operates through the Extendicare, ParaMed, Extendicare Assist, and SGP Purchasing Partner Network brands. The company was incorporated in 1968 and is based in Markham, Canada.

About Encompass Health

Encompass Health Corporation provides post-acute healthcare services in the United States and Puerto Rico. It owns and operates inpatient rehabilitation hospitals that provide medical, nursing, therapy, and ancillary services. The company provides specialized rehabilitative treatment on an inpatient basis to patients who have experienced physical or cognitive disabilities or injuries due to medical conditions, such as strokes, hip fractures, and various debilitating neurological conditions. It offers services through the Medicare program to federal government, managed care plans and private insurers, state governments, and other patients. The company was formerly known as HealthSouth Corporation and changed its name to Encompass Health Corporation in January 2018. The company was incorporated in 1984 and is based in Birmingham, Alabama.