Are Investors Undervaluing DaVita (DVA) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 stock to keep an eye on is DaVita (DVA). DVA is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 10.13, while its industry has an average P/E of 17.70. 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.
Investors will also notice that DVA has a PEG ratio of 0.80. 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 2.13. Within the past year, DVA's PEG has been as high as 1.87 and as low as 0.76, with a median of 1.14.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DVA has a P/S ratio of 0.62. This compares to its industry's average P/S of 1.15.
Finally, we should also recognize that DVA has a P/CF ratio of 5.97. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 23.19. 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 6.15.
Another great Medical - Outpatient and Home Healthcare stock you could consider is Encompass Health (EHC), which is a # 2 (Buy) stock with a Value Score of A.
Shares of Encompass Health currently holds a Forward P/E ratio of 16.97, and its PEG ratio is 1.34. In comparison, its industry sports average P/E and PEG ratios of 17.70 and 2.13.
Over the last 12 months, EHC's P/E has been as high as 21.45, as low as 16.26, with a median of 18.89, and its PEG ratio has been as high as 2.93, as low as 1.16, with a median of 1.64.
Encompass Health sports a P/B ratio of 2.95 as well; this compares to its industry's price-to-book ratio of 2.64. In the past 52 weeks, EHC's P/B has been as high as 3.57, as low as 2.82, with a median of 3.31.
These are just a handful of the figures considered in DaVita and Encompass Health'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 and EHC is an impressive value stock right now.
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DaVita Inc. (DVA) : Free Stock Analysis Report
Encompass Health Corporation (EHC) : Free Stock Analysis Report
