Is Encompass Health Corp. overvalued or undervalued?

As of 13 May 2025, the valuation grade for Encompass Health Corp. has moved from expensive to very expensive, indicating a significant increase in perceived valuation. The company is currently considered overvalued. Key ratios include a P/E ratio of 21, a Price to Book Value of 6.49, and an EV to EBITDA of 13.02, all of which suggest a premium valuation compared to its peers.
In comparison to its peers, Encompass Health Corp. has a P/E ratio higher than DaVita, Inc. at 10.06 and The Ensign Group, Inc. at 29.84, while its EV to EBITDA is also elevated compared to DaVita's 7.79. The PEG ratio of 0.71 indicates that while the company may have growth potential, its current valuation does not reflect a favorable investment opportunity. Despite strong returns over the past year, outperforming the S&P 500, the current metrics suggest that investors may be paying too much for future growth.