Head to Head Survey: The Pennant Group (NASDAQ:PNTG) versus Encompass Health (NYSE:EHC)

Encompass Health (NYSE:EHC) and The Pennant Group (NASDAQ:PNTG) are both medical companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, valuation and earnings.

Insider & Institutional Ownership

97.3% of Encompass Health shares are owned by institutional investors. Comparatively, 85.9% of The Pennant Group shares are owned by institutional investors. 2.1% of Encompass Health shares are owned by insiders. Comparatively, 5.4% of The Pennant Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility and Risk

Encompass Health has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500. Comparatively, The Pennant Group has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500.

Earnings and Valuation

This table compares Encompass Health and The Pennant Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Encompass Health	$5.37 billion	2.02	$455.70 million	$5.29	20.34
The Pennant Group	$695.24 million	1.45	$22.56 million	$0.75	38.73

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Encompass Health	9.33%	17.84%	7.87%
The Pennant Group	3.15%	9.37%	4.20%

Analyst Ratings

This is a breakdown of current ratings and target prices for Encompass Health and The Pennant Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Encompass Health	0	1	8	2	3.09
The Pennant Group	0	1	6	1	3.00

Encompass Health presently has a consensus target price of $142.86, indicating a potential upside of 32.75%. The Pennant Group has a consensus target price of $34.80, indicating a potential upside of 19.79%. Given Encompass Health’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Encompass Health is more favorable than The Pennant Group.

Summary

Encompass Health beats The Pennant Group on 12 of the 15 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 The Pennant Group

The Pennant Group, Inc. provides healthcare services in the United States. It operates in two segments, Home Health and Hospice Services, and Senior Living Services. The company offers home health services, including clinical services, such as nursing, speech, occupational and physical therapy, medical social work, and home health aide services; and hospice services comprising clinical care, education, and counseling services for the physical, spiritual, and psychosocial needs of terminally ill patients and their families. It also provides senior living services, such as residential accommodations, activities, meals, housekeeping, and assistance in the activities of daily living to seniors who are independent or who require some support. The company operates home health, hospice, and home care agencies, as well as senior living communities throughout Arizona, California, Colorado, Idaho, Montana, Nevada, Oklahoma, Oregon, Texas, Utah, Washington, Wisconsin, and Wyoming. The Pennant Group, Inc. was incorporated in 2019 and is headquartered in Eagle, Idaho.