CVS Health (NYSE:CVS – Get Free Report) and Encompass Health (NYSE:EHC – Get Free Report) are both large-cap healthcare companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, analyst recommendations, valuation, profitability, risk and institutional ownership.
Valuation and Earnings
This table compares CVS Health and Encompass Health”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| CVS Health | $402.07 billion | 0.29 | $1.77 billion | $3.78 | 23.92 |
| Encompass Health | $6.21 billion | 2.01 | $566.20 million | $6.14 | 20.58 |
Profitability
This table compares CVS Health and Encompass Health’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| CVS Health | 1.18% | 13.12% | 3.95% |
| Encompass Health | 10.01% | 18.08% | 8.22% |
Volatility and Risk
CVS Health has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, Encompass Health has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500.
Dividends
CVS Health pays an annual dividend of $2.66 per share and has a dividend yield of 2.9%. Encompass Health pays an annual dividend of $0.84 per share and has a dividend yield of 0.7%. CVS Health pays out 70.4% of its earnings in the form of a dividend. Encompass Health pays out 13.7% 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. CVS Health has raised its dividend for 4 consecutive years and Encompass Health has raised its dividend for 2 consecutive years. CVS Health is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for CVS Health and Encompass Health, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| CVS Health | 0 | 3 | 20 | 0 | 2.87 |
| Encompass Health | 0 | 1 | 5 | 1 | 3.00 |
CVS Health presently has a consensus target price of $107.80, suggesting a potential upside of 19.23%. Encompass Health has a consensus target price of $148.50, suggesting a potential upside of 17.52%. Given CVS Health’s higher probable upside, analysts plainly believe CVS Health is more favorable than Encompass Health.
Insider & Institutional Ownership
80.7% of CVS Health shares are owned by institutional investors. Comparatively, 97.3% of Encompass Health shares are owned by institutional investors. 0.9% of CVS Health shares are owned by company insiders. Comparatively, 1.8% of Encompass Health shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Summary
Encompass Health beats CVS Health on 11 of the 18 factors compared between the two stocks.
About CVS Health
CVS Health Corporation provides health solutions in the United States. It operates through Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness segments. The Health Care Benefits segment offers traditional, voluntary, and consumer-directed health insurance products and related services. It serves employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups, and expatriates. The Health Services segment offers pharmacy benefit management solutions, including plan design and administration, formulary management, retail pharmacy network management, specialty and mail order pharmacy, clinical, disease management, and medical spend management services. It serves employers, insurance companies, unions, government employee groups, health plans, prescription drug plans, Medicaid managed care plans, CMS, plans offered on public health insurance, and other sponsors of health benefit plans. The Pharmacy & Consumer Wellness segment sells prescription and over-the-counter drugs, consumer health and beauty products, and personal care products. This segment also distributes prescription drugs; and provides related pharmacy consulting and other ancillary services to care facilities and other care settings. It operates online retail pharmacy websites, LTC pharmacies and on-site pharmacies, retail specialty pharmacy stores, compounding pharmacies and branches for infusion and enteral nutrition services. The company was formerly known as CVS Caremark Corporation and changed its name to CVS Health Corporation in September 2014. CVS Health Corporation was incorporated in 1996 and is headquartered in Woonsocket, Rhode Island.
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.
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