Are Investors Undervaluing DaVita HealthCare (DVA) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
DaVita HealthCare (DVA) is a stock many investors are watching right now. DVA is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 12.26 right now. For comparison, its industry sports an average P/E of 19.50. Over the last 12 months, DVA's Forward P/E has been as high as 15.61 and as low as 10.51, with a median of 12.69.
Investors will also notice that DVA has a PEG ratio of 1.03. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DVA's industry currently sports an average PEG of 1.89. Over the past 52 weeks, DVA's PEG has been as high as 1.59 and as low as 0.52, with a median of 0.65.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 0.96. This compares to its industry's average P/S of 1.21.
Finally, our model also underscores that DVA has a P/CF ratio of 7.73. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid 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 year, DVA's P/CF has been as high as 11.04 and as low as 5.46, with a median of 7.27.
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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.