Head to Head Comparison: HealthStream (HSTM) vs. Encompass Health (EHC)

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

Analyst Ratings

This is a breakdown of current recommendations for HealthStream and Encompass Health, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HealthStream 0 4 4 0 2.50
Encompass Health 0 2 3 0 2.60

HealthStream currently has a consensus target price of $25.67, indicating a potential upside of 3.75%. Encompass Health has a consensus target price of $62.33, indicating a potential upside of 5.65%. Given Encompass Health’s stronger consensus rating and higher probable upside, analysts plainly believe Encompass Health is more favorable than HealthStream.

Earnings and Valuation

This table compares HealthStream and Encompass Health’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HealthStream $247.66 million 3.20 $10.00 million $0.27 91.63
Encompass Health $3.97 billion 1.46 $256.30 million $2.76 21.38

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

Dividends

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

Insider & Institutional Ownership

71.0% of HealthStream shares are held by institutional investors. Comparatively, 91.7% of Encompass Health shares are held by institutional investors. 21.1% of HealthStream shares are held by company insiders. Comparatively, 1.6% of Encompass Health shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

HealthStream has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Encompass Health has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
HealthStream 4.04% 2.73% 1.99%
Encompass Health 6.45% 20.59% 5.43%

Summary

Encompass Health beats HealthStream on 10 of the 16 factors compared between the two stocks.

About HealthStream

HealthStream, Inc. provides workforce and provider solutions to the healthcare organizations in the United States. It operates in HealthStream Workforce Solutions and HealthStream Provider Solutions segments. The company offers workforce development solutions comprising software-as-a-service (SaaS) and subscription-based products to meet talent management, training, certification, competency assessment, performance appraisal, and development needs, as well as training, implementation, and account management services. It also provides applications for recruiting and applicant tracking; learning; performance appraisal; compensation management; succession planning; competency management; credentialing and privileging; provider enrollment; disclosure management; clinical development; simulation-based education; and industry-sponsored training. In addition, the company offers EchoCredentialing, a platform that manages medical staff credentialing and privileging processes; EchoOneApp, an enrollment platform; and EchoAccess, a platform that supports hospital call centers. Further, it provides Verity, a SaaS-based credentialing, privileging, and enrollment solution. The company markets its products and services to healthcare industry, including private, not for profit, and government entities, as well as pharmaceutical and medical device companies. HealthStream, Inc. was founded in 1990 and is headquartered in Nashville, Tennessee.

About Encompass Health

Encompass Health Corporation, formerly HealthSouth Corporation, is a provider of post-acute healthcare services, offering both facility-based and home-based post-acute services in 35 states and Puerto Rico through its network of inpatient rehabilitation hospitals, home health agencies and hospice agencies. The Company manages its operations through segments, including inpatient rehabilitation, and home health and hospice. It is an owner and operator of inpatient rehabilitation hospitals. It provides specialized rehabilitative treatment on both an inpatient and outpatient basis. It offers its home health and hospice services through Encompass Home Health and Hospice business (Encompass). Encompass operates home health and hospice agencies in 25 states, with concentrations in the Southeast, Oklahoma, and Texas. As of December 31, 2016, the Company operated 123 inpatient rehabilitation hospitals.

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