ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Encompass Health's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2026 was 15.01%.
As of today (2026-07-03), Encompass Health's WACC % is 6.81%. Encompass Health's ROIC % is 13.92% (calculated using TTM income statement data).
Encompass Health generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Encompass Health (MEX:EHC) ROIC % Explanation
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Encompass Health's WACC % is 6.81%. Encompass Health's ROIC % is 13.92% (calculated using TTM income statement data).
Encompass Health generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Encompass Health ROIC % Related Terms
Encompass Health ROIC % Historical Data
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The historical data trend for Encompass Health's ROIC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Medical Care Facilities subindustry, Encompass Health's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Encompass Health ROIC % vs Healthcare Providers & Services Industry
For the Healthcare Providers & Services industry and Healthcare sector, Encompass Health's ROIC % distribution charts can be found below:
* The bar in red indicates where Encompass Health's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Encompass Health (MEX:EHC) has a ROIC % of 15.01% as of Mar. 2026. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Encompass Health and its competitors.
Is Encompass Health's ROIC % too high?
Encompass Health's current ROIC % is 15.01%. The Healthcare Providers & Services industry median ROIC % is 3.08. Encompass Health's value of 15.01% is 388.1% above this industry median. Overall, Encompass Health has a GF Score™ of 88/100, reflecting its overall financial health beyond just this single metric.
How does Encompass Health's ROIC % compare to ENSG and UHS?
Encompass Health's ROIC % of 15.01% can be compared against companies in the Healthcare Providers & Services industry. The industry median ROIC % is 3.08. Encompass Health's value of 15.01% is 388.1% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Healthcare Providers & Services company?
The median ROIC % among Healthcare Providers & Services companies is 3.08, based on 670 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Encompass Health's current ROIC % of 15.01% is 388.1% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Encompass Health and its competitors. For the Healthcare Providers & Services industry, the median ROIC % is 3.08 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Encompass Health's current ROIC % is 15.01%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Encompass Health stock overvalued right now?
Encompass Health (MEX:EHC) has a current ROIC % of 15.01%. The stock's GF Value™ is MXN1,344.64, compared to a current price of MXN1,280.08 — trading 4.8% below its estimated fair value. The current ROIC % is 15.01% and 388.1% above the Healthcare Providers & Services industry median of 3.08. Encompass Health's overall GF Score™ is 88/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For Encompass Health (MEX:EHC), the current ROIC % is 15.01% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Encompass Health (MEX:EHC) Overvalued in 2026?
Based on GuruFocus' analysis, Encompass Health stock appears to be undervalued.
The current stock price of MXN1,280.08 is trading 4.8% below its estimated GF Value™ of MXN1,344.64.
Key valuation signals for MEX:EHC:
ROIC %: 15.01%
GF Value™: MXN1,344.64 vs. price of MXN1,280.08 (4.8% below fair value)
Industry Position: 388.1% above the Healthcare Providers & Services median
No single metric tells the full story. See the MEX:EHC stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Encompass Health Corp provides post-acute healthcare services in the United States through a network of inpatient rehabilitation hospitals, which is the company's sole segment. Inpatient rehabilitation contributes the majority of the firm's revenue and provides specialized rehabilitative treatment through a network of inpatient hospitals. The company's inpatient rehabilitation hospitals provide a higher level of rehabilitative care 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.
88GF Score
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