Yahoo Finance Results: Encompass Health Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates
A week ago, Encompass Health Corporation (NYSE:EHC) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Encompass Health beat earnings, with revenues hitting US$1.3b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 20%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for Encompass Health
Following the latest results, Encompass Health's ten analysts are now forecasting revenues of US$5.28b in 2024. This would be an okay 6.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 3.2% to US$3.99. Before this earnings report, the analysts had been forecasting revenues of US$5.26b and earnings per share (EPS) of US$3.90 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$91.91, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Encompass Health, with the most bullish analyst valuing it at US$108 and the most bearish at US$83.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Encompass Health is an easy business to forecast or the the analysts are all using similar assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Encompass Health's growth to accelerate, with the forecast 8.9% annualised growth to the end of 2024 ranking favourably alongside historical growth of 0.8% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Encompass Health is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Encompass Health's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$91.91, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Encompass Health analysts - going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Encompass Health you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
