Analyzing Encompass Health (NYSE:EHC) and The Pennant Group (NASDAQ:PNTG)

The Pennant Group (NASDAQ:PNTG) and Encompass Health (NYSE:EHC) are both medical companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Analyst Recommendations

This is a summary of recent ratings and price targets for The Pennant Group and Encompass Health, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The Pennant Group	0	1	6	1	3.00
Encompass Health	0	1	8	2	3.09

The Pennant Group currently has a consensus price target of $34.80, indicating a potential upside of 18.17%. Encompass Health has a consensus price target of $142.86, indicating a potential upside of 33.42%. Given Encompass Health’s stronger consensus rating and higher possible upside, analysts clearly believe Encompass Health is more favorable than The Pennant Group.

Risk & Volatility

The Pennant Group has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500. Comparatively, Encompass Health has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Insider and Institutional Ownership

85.9% of The Pennant Group shares are held by institutional investors. Comparatively, 97.3% of Encompass Health shares are held by institutional investors. 5.4% of The Pennant Group shares are held by company insiders. Comparatively, 2.1% of Encompass Health shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares The Pennant Group 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
The Pennant Group	$695.24 million	1.47	$22.56 million	$0.75	39.27
Encompass Health	$5.37 billion	2.01	$455.70 million	$5.29	20.24

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
The Pennant Group	3.15%	9.37%	4.20%
Encompass Health	9.33%	17.84%	7.87%

Summary

Encompass Health beats The Pennant Group on 12 of the 15 factors compared between the two stocks.

About The Pennant Group

The Pennant Group, Inc. provides healthcare services in the United States. It operates in two segments, Home Health and Hospice Services, and Senior Living Services. The company offers home health services, including clinical services, such as nursing, speech, occupational and physical therapy, medical social work, and home health aide services; and hospice services comprising clinical care, education, and counseling services for the physical, spiritual, and psychosocial needs of terminally ill patients and their families. It also provides senior living services, such as residential accommodations, activities, meals, housekeeping, and assistance in the activities of daily living to seniors who are independent or who require some support. The company operates home health, hospice, and home care agencies, as well as senior living communities throughout Arizona, California, Colorado, Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin, and Wyoming. The Pennant Group, Inc. was incorporated in 2019 and is headquartered in Eagle, Idaho.

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.