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Is DaVita HealthCare (DVA) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

DaVita HealthCare (DVA) is a stock many investors are watching right now. DVA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 12.58. This compares to its industry's average Forward P/E of 20.84. Over the past year, DVA's Forward P/E has been as high as 15.61 and as low as 9.37, with a median of 12.14.

DVA is also sporting a PEG ratio of 1.38. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DVA's PEG compares to its industry's average PEG of 1.58. DVA's PEG has been as high as 1.54 and as low as 0.42, with a median of 0.56, all within the past year.

We should also highlight that DVA has a P/B ratio of 4.50. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 6.39. Within the past 52 weeks, DVA's P/B has been as high as 4.89 and as low as 1.77, with a median of 4.05.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. DVA has a P/S ratio of 0.81. This compares to its industry's average P/S of 1.26.

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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