Is Encompass Health Corp. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Encompass Health Corp. has moved from very expensive to attractive, indicating a shift towards a more favorable assessment. The company appears to be undervalued, supported by a P/E ratio of 21, a PEG ratio of 0.71, and an EV to EBITDA ratio of 13.02. In comparison to peers, Encompass Health's P/E ratio is lower than The Ensign Group, Inc. at 32.46, but higher than DaVita, Inc. at 9.71, suggesting a competitive position within its industry.
The company's recent performance has outpaced the S&P 500, with a year-to-date return of 34.87% compared to the index's 13.30%. This strong performance, coupled with a high dividend yield of 35.19% and robust ROE of 30.29%, reinforces the attractiveness of the stock at its current valuation.