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Is DaVita HealthCare (DVA) Stock Undervalued Right Now?

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Zacks Equity Research
·3 min read
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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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is DaVita HealthCare (DVA). DVA is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 14.09 right now. For comparison, its industry sports an average P/E of 18.60. Over the past year, DVA's Forward P/E has been as high as 15.61 and as low as 10.51, with a median of 12.75.

DVA is also sporting a PEG ratio of 0.77. 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 industry currently sports an average PEG of 1.81. Within the past year, DVA's PEG has been as high as 1.59 and as low as 0.52, with a median of 0.77.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. DVA has a P/S ratio of 1.12. This compares to its industry's average P/S of 1.53.

Finally, investors will want to recognize that DVA has a P/CF ratio of 9.77. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 26.35. Over the past 52 weeks, DVA's P/CF has been as high as 11 and as low as 5.46, with a median of 7.25.

These are just a handful of the figures considered in DaVita HealthCare's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DVA is an impressive value stock right now.


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