Time To Buy The Dip In Encompass Health Stock?
Encompass Health (EHC) stock has fallen by 11.3% in less than a month, from $113.43 on 11th Feb, 2026 to $100.63 now. Should you buy this dip?
Dip buying is a viable strategy for quality stocks that have a history of recovering from dips. As it turns out, EHC stock passes basic quality checks. Historically, the median return for the 12-month period following sharp dips was 38% , with median peak return reaching 52%. We define sharp dip as stock going down 20% or more, in less than 30 day period.
Below, we get into details of historical dips and subsequent returns.
Historical Median Returns Post Dips
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| Period | Past Median Return |
|---|---|
| 1M | 15.0% |
| 3M | 13.2% |
| 6M | 8.7% |
| 12M | 37.9% |
Historical Dip-Wise Details
EHC had 3 events since 1/1/2010 where the dip threshold of -20% within 30 days was triggered
- 52% median peak return within 1 year of dip event
- 349 days is the median time to peak return after a dip event
- -15% median max drawdown within 1 year of dip event
| 30 Day Dip | EHC Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | EHC | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | 38% | 52% | -15% | 349 | ||||
| 6162022 | -20% | -15% | 51% | 52% | -1% | 365 | ||
| 3122020 | -24% | -24% | 38% | 52% | -15% | 315 | ||
| 8052011 | -22% | -6% | 14% | 25% | -27% | 349 | ||
Encompass Health Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 10.5% | Pass |
| Revenue Growth (3-Yr Avg) | 10.9% | Pass |
| Operating Cash Flow Margin (LTM) | 19.8% | Pass |
| Leverage (see below) | – | Pass |
| => Interest Coverage Ratio | 8.7 | |
| => Cash To Interest Expense Ratio | 0.6 |
Not sure if you can take a call on EHC stock? Consider portfolio approach
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