Extendicare (OTCMKTS:EXETF) and Encompass Health (NYSE:EHC) Financial Survey

Encompass Health (NYSE:EHC) and Extendicare (OTCMKTS:EXETF) are both healthcare companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, risk, earnings, dividends, valuation and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Encompass Health	10.01%	18.08%	8.22%
Extendicare	N/A	N/A	N/A

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Encompass Health	0	1	7	1	3.00
Extendicare	0	0	5	0	3.00

Encompass Health presently has a consensus target price of $148.71, suggesting a potential upside of 22.93%. Given Encompass Health’s higher probable upside, analysts clearly believe Encompass Health is more favorable than Extendicare.

Institutional and Insider Ownership

97.3% of Encompass Health shares are owned by institutional investors. Comparatively, 9.4% of Extendicare shares are owned by institutional investors. 1.8% of Encompass Health shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Encompass Health	$5.94 billion	2.01	$566.20 million	$6.14	19.70
Extendicare	N/A	N/A	N/A	($0.26)	-88.25

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

Dividends

Encompass Health pays an annual dividend of $0.76 per share and has a dividend yield of 0.6%. Extendicare pays an annual dividend of $0.48 per share and has a dividend yield of 2.1%. Encompass Health pays out 12.4% of its earnings in the form of a dividend. Extendicare pays out -185.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Encompass Health has increased its dividend for 2 consecutive years. Extendicare is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Encompass Health beats Extendicare on 12 of the 14 factors compared between the two stocks.

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.

About Extendicare

Extendicare Inc., through its subsidiaries, provides care and services for seniors in Canada. The company offers long term care (LTC) services; and home health care services, such as nursing care, occupational, physical and speech therapy, and assistance with daily activities, as well as management, consulting, and other services to third parties. It operates through the Extendicare, ParaMed, Extendicare Assist, and SGP Purchasing Partner Network brands. The company was incorporated in 1968 and is based in Markham, Canada.