Is DaVita HealthCare (DVA) Stock Undervalued 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 company to watch right now is DaVita HealthCare (DVA). DVA is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 11.80 right now. For comparison, its industry sports an average P/E of 19.99. DVA's Forward P/E has been as high as 15.61 and as low as 10.40, with a median of 12.69, all within the past year.
We also note that DVA holds a PEG ratio of 0.99. 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 1.94. Over the last 12 months, DVA's PEG has been as high as 1.59 and as low as 0.49, with a median of 0.62.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DVA has a P/S ratio of 0.9. This compares to its industry's average P/S of 1.12.
Finally, we should also recognize that DVA has a P/CF ratio of 7.25. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 26.35. Within the past 12 months, DVA's P/CF has been as high as 13.57 and as low as 5.46, with a median of 7.37.
These are only a few of the key metrics included in DaVita HealthCare's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DVA looks like an impressive value stock at the moment.
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