Encompass Health (NYSE:EHC) & Chemed (NYSE:CHE) Head-To-Head Analysis

Encompass Health (NYSE:EHC) and Chemed (NYSE:CHE) are both medical companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, valuation, institutional ownership, risk, earnings, dividends and profitability.

Risk & Volatility

Encompass Health has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, Chemed has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500.

Dividends

Encompass Health pays an annual dividend of $0.76 per share and has a dividend yield of 0.6%. Chemed pays an annual dividend of $2.40 per share and has a dividend yield of 0.6%. Encompass Health pays out 14.9% of its earnings in the form of a dividend. Chemed pays out 12.3% 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 increased its dividend for 2 consecutive years and Chemed has increased its dividend for 16 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Encompass Health	9.22%	17.83%	7.68%
Chemed	11.56%	25.83%	17.77%

Valuation and Earnings

This table compares Encompass Health and Chemed”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Encompass Health	$5.37 billion	2.29	$455.70 million	$5.11	23.88
Chemed	$2.51 billion	2.49	$302.00 million	$19.45	22.07

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

Insider and Institutional Ownership

97.3% of Encompass Health shares are owned by institutional investors. Comparatively, 95.8% of Chemed shares are owned by institutional investors. 2.0% of Encompass Health shares are owned by company insiders. Comparatively, 3.3% of Chemed shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for Encompass Health and Chemed, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Encompass Health	0	0	8	1	3.11
Chemed	0	1	4	0	2.80

Encompass Health presently has a consensus price target of $139.86, indicating a potential upside of 14.62%. Chemed has a consensus price target of $578.50, indicating a potential upside of 34.74%. Given Chemed’s higher possible upside, analysts plainly believe Chemed is more favorable than Encompass Health.

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.

About Chemed

Chemed Corporation provides hospice and palliative care services to patients through a network of physicians, registered nurses, home health aides, social workers, clergy, and volunteers primarily in the United States. The company operates in VITAS and Roto-Rooter segments. It offers plumbing, drain cleaning, excavation, water restoration, and other related services to residential and commercial customers through company-owned branches, independent contractors, and franchisees. The company was incorporated in 1970 and is headquartered in Cincinnati, Ohio.