DVA

How Come More Analysts Don't Recommend DaVita (DVA)?

DaVita may be undervalued with poor growth indicators, but the 7 analysts following the company give it an rating of hold. Their target prices range from $123.5 to $145.0 per share, for an average of $133.36. At today's price of $135.25, DaVita is trading 1.42% away from its average target price, suggesting there is an analyst consensus of little upside potential for the stock.

DaVita Inc. provides kidney dialysis services for patients suffering from chronic kidney failure in the United States. Based in Denver, CO, the Large-Cap Health Care company has 70,000 full time employees. DaVita has not offered a regular dividend during the last year.

DaVita has a trailing twelve month P/E ratio of 18.2, compared to an average of 30.21 for the Health Care sector. Considering its EPS guidance of $10.08, the company has a forward P/E ratio of 13.4.

DaVita is overpriced compared to its book value, since its P/B ratio of 12.81 is higher than the sector average of 4.08. The company's shares are currently 210.9% below their Graham number, indicating that its shares have a margin of safety.

If analysts are willing to give the company a bad rating despite its potentially attractive valuation, its likely that they are concered by DaVita's lacking growth potential, as signaled by its 1.3% rate of revenue growth, and capital expenditures that are only growing at -8.3% on average each year.

2018 2019 2020 2021 2022 2023
Revenue (M) $11,405 $11,388 $11,551 $11,619 $11,610 $12,140
Operating Margins 13% 14% 15% 15% 12% 13%
Net Margins 3% 7% 7% 8% 5% 6%
Net Income (M) $333 $811 $774 $978 $560 $692
Net Interest Expense (M) $487 $444 $304 $285 $357 $399
Depreciation & Amort. (M) $591 $615 $630 $681 $733 $745
Diluted Shares (M) 172 154 123 110 96 93
Earnings Per Share $1.93 $5.27 $6.31 $8.9 $5.85 $7.42
EPS Growth n/a 173.06% 19.73% 41.05% -34.27% 26.84%
Avg. Price $68.71 $57.95 $86.08 $115.59 $105.8 $135.425
P/E Ratio 37.55 11.9 13.97 12.93 18.18 17.7
Free Cash Flow (M) $785 $1,306 $1,304 $1,289 $961 $1,491
CAPEX (M) $987 $767 $675 $641 $603 $568
EV / EBITDA 10.53 7.37 7.99 8.51 9.11 8.63
Total Debt (M) $10,102 $8,108 $8,086 $8,908 $8,924 $8,392
Net Debt / EBITDA 4.62 3.1 3.34 3.41 4.19 3.41
Current Ratio 1.72 1.56 1.27 1.32 1.2 1.19
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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