Encompass Health (NYSE:EHC) vs. HealthEquity (NASDAQ:HQY) Critical Contrast

HealthEquity (NASDAQ:HQY) and Encompass Health (NYSE:EHC) are both healthcare companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
HealthEquity	17.36%	15.33%	9.51%
Encompass Health	10.01%	18.08%	8.22%

Institutional and Insider Ownership

99.5% of HealthEquity shares are owned by institutional investors. Comparatively, 97.3% of Encompass Health shares are owned by institutional investors. 1.6% of HealthEquity shares are owned by insiders. Comparatively, 1.8% of Encompass Health shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility & Risk

HealthEquity has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500. Comparatively, Encompass Health has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for HealthEquity and Encompass Health, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HealthEquity	1	1	10	1	2.85
Encompass Health	0	1	6	1	3.00

HealthEquity presently has a consensus target price of $111.87, suggesting a potential upside of 16.56%. Encompass Health has a consensus target price of $146.83, suggesting a potential upside of 19.85%. Given Encompass Health’s stronger consensus rating and higher probable upside, analysts clearly believe Encompass Health is more favorable than HealthEquity.

Earnings & Valuation

This table compares HealthEquity and Encompass Health”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HealthEquity	$1.31 billion	6.04	$215.20 million	$2.77	34.65
Encompass Health	$5.94 billion	2.04	$566.20 million	$6.14	19.95

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

Summary

Encompass Health beats HealthEquity on 8 of the 14 factors compared between the two stocks.

About HealthEquity

HealthEquity, Inc. provides technology-enabled services platforms to consumers and employers in the United States. The company offers cloud-based platforms for individuals to make health saving and spending decisions, pay healthcare bills, receive personalized benefit information, earn wellness incentives, grow their savings, and make investment choices; and health savings accounts. It also provides investment platform; and online-only automated investment advisory services through Advisor, a Web-based tool. In addition, the company offers flexible spending accounts; health reimbursement arrangements; and Consolidated Omnibus Budget Reconciliation Act continuation services, as well as administers pre-tax commuter benefit programs. It serves clients through a direct sales force; benefits brokers and advisors; and a network of health plans, benefits administrators, benefits brokers and consultants, and retirement plan record-keepers. HealthEquity, Inc. was incorporated in 2002 and is based in Draper, Utah.

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.