Reviewing Mednax (MD) and Encompass Health (EHC)

Mednax (NYSE: MD) and Encompass Health (NYSE:EHC) are both mid-cap medical companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, earnings, institutional ownership and risk.

Valuation and Earnings

This table compares Mednax and Encompass Health’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mednax $3.46 billion 1.43 $320.37 million $3.15 16.73
Encompass Health $3.97 billion 1.42 $256.30 million $2.76 20.79

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

Analyst Recommendations

This is a breakdown of recent ratings for Mednax and Encompass Health, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mednax 1 9 3 0 2.15
Encompass Health 0 2 4 0 2.67

Mednax presently has a consensus target price of $55.33, indicating a potential upside of 5.02%. Encompass Health has a consensus target price of $64.25, indicating a potential upside of 11.95%. Given Encompass Health’s stronger consensus rating and higher possible upside, analysts clearly believe Encompass Health is more favorable than Mednax.

Volatility & Risk

Mednax has a beta of 0.23, indicating that its share price is 77% less volatile than the S&P 500. Comparatively, Encompass Health has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500.

Institutional and Insider Ownership

98.5% of Mednax shares are owned by institutional investors. Comparatively, 92.1% of Encompass Health shares are owned by institutional investors. 2.7% of Mednax shares are owned by company insiders. Comparatively, 1.6% of Encompass Health shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Encompass Health pays an annual dividend of $1.00 per share and has a dividend yield of 1.7%. Mednax does not pay a dividend. Encompass Health pays out 36.2% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Mednax 9.26% 10.10% 5.23%
Encompass Health 6.45% 20.59% 5.43%

Summary

Encompass Health beats Mednax on 9 of the 16 factors compared between the two stocks.

Mednax Company Profile

MEDNAX, Inc., together with its subsidiaries, provides newborn, anesthesia, maternal-fetal, radiology, pediatric cardiology, and other pediatric subspecialties physician services in the United States and Puerto Rico. It offers neonatal care services, such as clinical care to babies born prematurely or with complications within specific units at hospitals through neonatal physician subspecialists, neonatal nurse practitioners, and other pediatric clinicians; anesthesia and anesthesia subspecialty care; and acute and chronic pain management services. The company also provides maternal-fetal care, including inpatient and office-based clinical care to expectant mothers and their unborn babies through maternal-fetal medicine subspecialists, as well as obstetricians and other clinicians consisting of maternal-fetal nurse practitioners, certified nurse mid-wives, ultrasonographers, and genetic counselors. In addition, its pediatric cardiology care services comprise inpatient and office-based pediatric cardiology care of the fetus, infant, child, and adolescent patient with congenital heart defects and acquired heart disease, as well as adults with congenital heart defects through pediatric cardiologist subspecialists and other related clinical professionals. Further, the company provides other pediatric subspecialty care services through pediatric subspecialists, such as pediatric intensivists, pediatric hospitalists, and pediatric surgeons, as well as pediatric ear, nose, and throat physicians; and support services in the areas of hospitals, primarily in the pediatric emergency rooms, labor and delivery areas, and nursery and pediatric departments. Additionally, it provides radiology and teleradiology services. As of December 31, 2017, the company's network consisted of approximately 4,075 affiliated physicians. MEDNAX, Inc. was founded in 1979 and is based in Sunrise, Florida.

Encompass Health Company Profile

Encompass Health Corporation provides facility-based and home-based post-acute healthcare services in the United States. The company operates through two segments, Inpatient Rehabilitation, and Home Health and Hospice. The Inpatient Rehabilitation segment provides specialized rehabilitative treatment on an inpatient and outpatient basis to patients who are recovering from conditions, such as stroke and other neurological disorders, cardiac and pulmonary conditions, brain and spinal cord injuries, complex orthopedic conditions, and amputations. The Home Health and Hospice segment provides home health and hospice services primarily in the Southeast and Texas. Its home health services include a range of Medicare-certified home nursing services to adult patients in need of care comprising skilled nursing, medical social work, and home health aide services, as well as physical, occupational, speech therapy, and others. This segment's hospice services comprise in-home services to terminally ill patients and their families to address patients' physical needs, including pain control and symptom management, and to provide emotional and spiritual support. As of March 1, 2018, Encompass Health Corporation operated 127 hospitals, and 237 home health and hospice agencies in 36 states and Puerto Rico. The company was formerly known as HealthSouth Corporation and changed its name to Encompass Health Corporation in January 2018. Encompass Health Corporation was founded in 1983 and is based in Birmingham, Alabama.

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