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DaVita Healthcare's (DVA) Q1 Earnings: What to Expect? - Analyst Blog

DaVita Healthcare Partners Inc.DVA is set to report first-quarter 2015 earnings results on May 4, 2015. Last quarter, it posted a 9.09% positive earnings surprise. Let's see how things are shaping up for this announcement.

Factors Affecting the Past Quarter

In the quarter under review, this leading kidney and health care services provider has enhanced its operational strength, which should boost its results. The company also entered into a joint venture with Centura Health to form a company named FullWell to provide superior health care to consumers in Colorado and Kansas at affordable prices.

Moreover, the company partnered with Humana Inc. HUM to form a special needs plan (SNP) for Medicare beneficiaries with end stage renal disease (ESRD). These deals have provided DaVita with an access to the partnered entity's customer base. These, along with the upgrade of the company's website (making it mobile-friendly), have expectedly attracted more members and should contribute positively to top line and earnings.

However, high financial leverage, increased expenses and the adverse effect of health care reform raise caution.

Earnings Whispers

Our proven model does not conclusively show that DaVita is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: DaVita has an ESP of -2.35%. This is because the Most Accurate estimate stands at 83 cents per share, while the Zacks Consensus Estimate is pegged at 85 cents per share.

Zacks Rank: DaVita carries a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, when combined with a negative ESP, the surprise prediction becomes difficult.

We caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks in the health care space which you may want to consider, as our model shows that, they have the right combination of elements to post an earnings beat this quarter:

Almost Family Inc. AFAM has an Earnings ESP of +8.70% and a Zacks Rank #3.

RadNet, Inc. RDNT has an Earnings ESP of +20.00% and a Zacks Rank #3.

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DAVITA HEALTHCR (DVA): Free Stock Analysis Report

HUMANA INC NEW (HUM): Free Stock Analysis Report

RADNET INC (RDNT): Free Stock Analysis Report

ALMOST FAMILY (AFAM): Free Stock Analysis Report

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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