Definitive Analysis
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Encompass Health Corporation (EHC)

Company Dividend Discount ModelIndustry: Medical - Care FacilitiesSector: Healthcare

Valuation Snapshot

Stable Growth$53.76 - $84.65$67.91
Multi-Stage$68.64 - $75.29$71.90
Blended Fair Value$69.91
Current Price$127.02
Upside-44.96%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS-10.39%-0.47%0.610.590.971.101.091.060.990.900.820.76
YoY Growth--3.97%-38.99%-11.76%0.27%2.94%7.84%10.16%9.19%8.55%17.33%
Dividend Yield--0.61%0.71%1.79%1.94%1.68%2.09%2.12%1.97%2.41%2.52%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)541.00
(-) Cash Dividends Paid (M)69.10
(=) Cash Retained (M)471.90
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)108.2067.6340.58
Cash Retained (M)471.90471.90471.90
(-) Cash Required (M)-108.20-67.63-40.58
(=) Excess Retained (M)363.70404.28431.33
(/) Shares Outstanding (M)102.23102.23102.23
(=) Excess Retained per Share3.563.954.22
LTM Dividend per Share0.680.680.68
(+) Excess Retained per Share3.563.954.22
(=) Adjusted Dividend4.234.634.90
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate1.13%2.13%3.13%
Fair Value$53.76$67.91$84.65
Upside / Downside-57.67%-46.54%-33.36%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)541.00552.54564.33576.37588.67601.23619.27
Payout Ratio12.77%28.22%43.66%59.11%74.55%90.00%92.50%
Projected Dividends (M)69.10155.92246.41340.69438.88541.11572.82

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate1.13%2.13%3.13%
Year 1 PV (M)141.52142.91144.31
Year 2 PV (M)202.99207.02211.10
Year 3 PV (M)254.74262.37270.15
Year 4 PV (M)297.84309.80322.11
Year 5 PV (M)333.30350.11367.59
PV of Terminal Value (M)5,786.086,077.866,381.29
Equity Value (M)7,016.477,350.077,696.55
Shares Outstanding (M)102.23102.23102.23
Fair Value$68.64$71.90$75.29
Upside / Downside-45.96%-43.39%-40.73%

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