Critical Contrast: Encompass Health (NYSE:EHC) and Brookdale Senior Living (NYSE:BKD)

Brookdale Senior Living (NYSE:BKD) and Encompass Health (NYSE:EHC) are both healthcare companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, earnings, risk, profitability, analyst recommendations and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Brookdale Senior Living	-6.51%	-15,050.32%	-2.19%
Encompass Health	10.01%	18.08%	8.22%

Volatility and Risk

Brookdale Senior Living has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500. Comparatively, Encompass Health has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Brookdale Senior Living and Encompass Health, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brookdale Senior Living	1	1	5	1	2.75
Encompass Health	0	2	6	1	2.89

Brookdale Senior Living currently has a consensus price target of $17.60, indicating a potential upside of 28.47%. Encompass Health has a consensus price target of $148.71, indicating a potential upside of 18.23%. Given Brookdale Senior Living’s higher possible upside, equities research analysts plainly believe Brookdale Senior Living is more favorable than Encompass Health.

Earnings and Valuation

This table compares Brookdale Senior Living and Encompass Health”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brookdale Senior Living	$3.19 billion	1.02	-$262.69 million	($0.86)	-15.93
Encompass Health	$5.94 billion	2.10	$566.20 million	$6.14	20.49

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

Institutional and Insider Ownership

97.3% of Encompass Health shares are held by institutional investors. 0.7% of Brookdale Senior Living shares are held by insiders. Comparatively, 1.8% of Encompass Health shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Encompass Health beats Brookdale Senior Living on 13 of the 14 factors compared between the two stocks.

About Brookdale Senior Living

Brookdale Senior Living Inc. owns, manages, and operates senior living communities in the United States. It operates in three segments: Independent Living, Assisted Living and Memory Care, and Continuing Care Retirement Communities (CCRCs). The Independent Living segment owns or leases communities comprising independent and assisted living units in a single community that are primarily designed for middle to upper income seniors. The Assisted Living and Memory Care segment owns or leases communities consisting of freestanding, multi-story communities and freestanding, single-story communities, which offer housing and 24-hour assistance with activities of daily living for the Company’s residents. This segment also operates memory care communities for residents with Alzheimer’s and other dementias. The CCRCs segment owns or leases communities that provides various living arrangements, such as independent and assisted living, memory care, and skilled nursing; and services to accommodate various levels of physical ability and healthcare needs. It also manages communities on behalf of others. Brookdale Senior Living Inc. was incorporated in 2005 and is headquartered in Brentwood, Tennessee.

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.