DaVita HealthCare (DVA) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.
The upward trend in estimate revisions for this kidney dialysis provider reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for DaVita HealthCare, as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The company is expected to earn $1.22 per share for the current quarter, which represents a year-over-year change of +117.86%.
Over the last 30 days, the Zacks Consensus Estimate for DaVita HealthCare has increased 12.52% because six estimates have moved higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $4.74 per share represents a change of +32.77% from the year-ago number.
The revisions trend for the current year also appears quite promising for DaVita HealthCare, with seven estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 12.02%.
Favorable Zacks Rank
The promising estimate revisions have helped DaVita HealthCare earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
While strong estimate revisions for DaVita HealthCare have attracted decent investments and pushed the stock 9.3% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
DaVita Inc. (DVA) : Free Stock Analysis Report
To read this article on Zacks.com click here.