Is DaVita (DVA) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is DaVita (DVA). DVA is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 10.29 right now. For comparison, its industry sports an average P/E of 17.23. Over the past year, DVA's Forward P/E has been as high as 15.73 and as low as 7.30, with a median of 12.91.
We also note that DVA holds a PEG ratio of 0.81. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DVA's PEG compares to its industry's average PEG of 2.08. Over the past 52 weeks, DVA's PEG has been as high as 1.87 and as low as 0.76, with a median of 1.16.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DVA has a P/S ratio of 0.63. This compares to its industry's average P/S of 1.18.
Finally, investors should note that DVA has a P/CF ratio of 6.04. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. DVA's P/CF compares to its industry's average P/CF of 22.54. Within the past 12 months, DVA's P/CF has been as high as 8.64 and as low as 4.38, with a median of 6.18.
Value investors will likely look at more than just these metrics, but the above data helps show that DaVita is likely undervalued currently. And when considering the strength of its earnings outlook, DVA sticks out at as one of the market's strongest value stocks.
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DaVita Inc. (DVA) : Free Stock Analysis Report
