| Snowflake Score | |
|---|---|
| Valuation | 5/6 |
| Future Growth | 1/6 |
| Past Performance | 1/6 |
| Financial Health | 2/6 |
| Dividends | 0/6 |
DVA Stock Overview
DaVita Inc. provides kidney dialysis services for patients suffering from chronic kidney failure.
DaVita Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$92.92 |
| 52 Week High | US$133.88 |
| 52 Week Low | US$74.97 |
| Beta | 1.17 |
| 1 Month Change | 8.72% |
| 3 Month Change | -1.73% |
| 1 Year Change | -29.93% |
| 3 Year Change | 66.20% |
| 5 Year Change | 63.65% |
| Change since IPO | 2,180.24% |
Recent News & Updates
DaVita could benefit from legislation that would return dialysis protection to Medicare
DaVita (NYSE:DVA) could benefit significantly if H.R. 8594, the Restore Protections for Dialysis Patients Act, is passed, according to Barclays. The aim of the bill is to restrict health plans from discriminating against patients with end-stage renal disease by offering low reimbursement rates for outpatient kidney dialysis. In June, the U.S. Supreme Court in Marietta Memorial Hospital Employee Health Benefit Plan vs. DaVita Inc. overturned a lower court's decision that found in favor of DaVita (DVA). The bill currently has 18 bi-partisan co-sponsors. Analyst Sarah James said that one scenario is incremental impact on pricing pressure. She estimated that each 1% commercial pricing pressure could impact OI by 4%. She added this could happen in 2024 or later. Read why Karreta Advisors is bullish on DaVita (DVA).
We Think DaVita (NYSE:DVA) Is Taking Some Risk With Its Debt
The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says...
DaVita stock dips as peer Fresenius outlook weighed down by labor cost, inflation
DaVita (NYSE:DVA) stock fell ~6% premarket July 28 after peer dialysis services provider Fresenius Medical Care (FMS) said it was cutting its outlook for FY22 due to increased headwinds from U.S. labor market and global inflation and also withdrawing its 2025 targets. Fresenius shares fell ~13% premarket following the announcement. YTD, DaVita stock has fallen ~24% while Fresenius has shed ~31%. See chart here. The SA Quant Rating and also the average Wall Street Analysts' Rating on DaVita is Hold. Meanwhile, the SA Quant Rating on Fresenius is Hold, which is in contrast to average Wall Street Analysts' Rating of Buy. DVA -5.66% to $82 premarket July 28
DaVita: Valuation Turning Attractive
DaVita's recent performance highlights its exposure to regulatory risk and its limitations as a business to proactively generate growth. We expect to see a recovery YoY into FY12/2023 driven primarily by normalizing conditions. Valuations look cheap with the shares trading on PER FY12/2023 8.2x and a free cash flow yield of 16.3%. We rate the shares as a buy. Investment thesis DaVita's (DVA) recent performance highlights its exposure to regulatory risk and its limitations as a business to proactively generate growth. However, we expect to see a recovery YoY into FY12/2023 driven primarily by normalizing conditions and current valuations look cheap with the shares trading on PER FY12/2023 at 8.2x and a free cash flow yield of 16.3%. We rate the shares as a buy. Quick primer DaVita operates the second largest dialysis center network in the US with 200k patients, a close second to market leader Fresenius Medical Care (FMS). It has nationwide coverage and operates having close relationships with local physicians who act as patient referrers. Berkshire Hathaway (BRK.A) (BRK.B) is the top shareholder with a 38.16% stake. Key financials (including consensus forecasts) Key financials (including consensus forecasts) (Company, Refinitiv) Our objectives We want to re-assess our thesis on DaVita, considering the price action over the last 2 years, recent results and news flow, and consensus outlook into FY12/2023. Not so defensive after all DaVita's perceived defensive strengths as the number 2 kidney dialysis player in the US market have yielded mixed results for shareholders over the last 2 years. The shares are flat on an absolute basis during this period, and the business model has shown itself to be vulnerable in the following manner. Firstly, despite providing an essential medical service DaVita has been affected by cost inflation which it cannot effectively pass on. A challenging labor market together with inflationary pressures pushes down margins, and despite economies of scale management is not expecting cost-saving measures to have a full-run benefit until 2025. With multi-year contracts in place with commercial insurers, any positive rate hike impact will be delayed at best. Secondly, we believe the Supreme Court ruling against the company for end-stage renal disease treatment payer reimbursements highlights the high regulatory risk profile of the business. Our conclusion is that DaVita has essentially no control over what appears to be a secular decline in commercial insurance payors. This will have a direct negative impact on the company's operations going forwards. With cost pressures expected to be sustained and DaVita not in a position to actively drum up demand for its services, there is not much in terms of proactive management that the company can execute in order to drive growth (except for M&A). DaVita is limited in its capacity to control its destiny, but there are some signs to show there will be some respite ahead. Low hurdles to come Q1 FY2022 results demonstrated that current earnings visibility is low. Treatment volumes are expected to be close to flat YoY for the full year and the mix is not expected to improve in the short term. However, there were negative one-off circumstances that should help DaVita improve its performance YoY. Seasonality is set to become more favorable with more treatment days returning YoY. COVID19 has continued to be a headwind resulting in lower treatment volume as well as a higher than expected mortality rate - this should begin to normalize into FY12/2023. Management has stated that 2022 is a 'transition year' with an improving outlook YoY. There are positive elements from falling contribution to ballot initiatives in California and progress in the Integrated Kidney Care (IKC) business. We believe that unless the overall business environment does not deteriorate significantly, DaVita is on course to operate in a more cordial environment into FY12/2023. We believe this is what consensus estimates (see Key Financials above) are also pricing in. Capital allocation We previously estimated that DaVita would find it more challenging to continue conducting share buybacks. However, it would appear that in actuality, one thing that investors can be fairly certain about is management's propensity to sustainably conduct share buybacks. In Q1 2022 the company bought back 2.1 million shares, and an additional 800,000 shares at the time of Q1 2022 reporting. Over the last 5 years, the company has spent the majority of free cash flow generated plus funds from fixed asset sales on buybacks. How sustainable this will be is still open to debate, but it is positive to note that the company has also managed to begin paying down its debt. We view this positively as buybacks are not being conducted at the cost of an ever-increasing debt pile. Capital allocation (cumulative) over the last 5 years Capital allocation (cumulative) over the last 5 years (Company, Refinitiv) Valuation On consensus estimates the shares are trading on PER FY12/2023 8.2x and a free cash flow yield of 16.3%. These valuations are cheap in our view, even when considering any valuation discount that may be warranted from regulatory risk.
Shareholder Returns
| DVA | US Healthcare | US Market | |
|---|---|---|---|
| 7D | 4.1% | 2.2% | 3.6% |
| 1Y | -29.9% | 14.0% | -9.6% |
Return vs Industry: DVA underperformed the US Healthcare industry which returned 14% over the past year.
Return vs Market: DVA underperformed the US Market which returned -9.6% over the past year.
Price Volatility
| DVA volatility | |
|---|---|
| DVA Average Weekly Movement | 6.3% |
| Healthcare Industry Average Movement | 8.7% |
| Market Average Movement | 7.7% |
| 10% most volatile stocks in US Market | 16.9% |
| 10% least volatile stocks in US Market | 3.2% |
Stable Share Price: DVA is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.
Volatility Over Time: DVA's weekly volatility (6%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1994 | 69,000 | Javier Rodriguez | https://www.davita.com |
DaVita Inc. provides kidney dialysis services for patients suffering from chronic kidney failure. The company operates kidney dialysis centers and provides related lab services in outpatient dialysis centers. It also provides outpatient, hospital inpatient, and home-based hemodialysis services; owns clinical laboratories that provide routine laboratory tests for dialysis and other physician-prescribed laboratory tests for ESRD patients; and management and administrative services to outpatient dialysis centers.
DaVita Fundamentals Summary
| DVA fundamental statistics | |
|---|---|
| Market Cap | US$8.48b |
| Earnings (TTM) | US$834.16m |
| Revenue (TTM) | US$11.63b |
10.2x
P/E Ratio0.7x
P/S RatioIs DVA overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| DVA income statement (TTM) | |
|---|---|
| Revenue | US$11.63b |
| Cost of Revenue | US$8.10b |
| Gross Profit | US$3.52b |
| Other Expenses | US$2.69b |
| Earnings | US$834.16m |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 9.14 |
| Gross Margin | 30.30% |
| Net Profit Margin | 7.17% |
| Debt/Equity Ratio | 415.4% |
How did DVA perform over the long term?
See historical performance and comparisonValuation
Is DVA undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
5/6Valuation Score 5/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast
Key Valuation Metric
Which metric is best to use when looking at relative valuation for DVA?
Other financial metrics that can be useful for relative valuation.
| What is DVA's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$8.48b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 1.9x |
| Enterprise Value/EBITDA | 9.6x |
| PEG Ratio | 1x |
Price to Earnings Ratio vs Peers
How does DVA's PE Ratio compare to its peers?
| DVA PE Ratio vs Peers |
|---|
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 75.2x | ||
CHE Chemed | 26.4x | 1.6% | US$7.3b |
RCM R1 RCM | 175.7x | 40.8% | US$10.9b |
LHCG LHC Group | 68.6x | 25.6% | US$5.0b |
OPCH Option Care Health | 36.5x | 15.2% | US$6.4b |
DVA DaVita | 10.1x | 9.8% | US$8.4b |
Price-To-Earnings vs Peers: DVA is good value based on its Price-To-Earnings Ratio (10.2x) compared to the peer average (76.7x).
Price to Earnings Ratio vs Industry
How does DVA's PE Ratio compare vs other companies in the US Healthcare Industry?
Price-To-Earnings vs Industry: DVA is good value based on its Price-To-Earnings Ratio (10.2x) compared to the US Healthcare industry average (19.8x)
Price to Earnings Ratio vs Fair Ratio
What is DVA's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 10.2x |
| Fair PE Ratio | 28.4x |
Price-To-Earnings vs Fair Ratio: DVA is good value based on its Price-To-Earnings Ratio (10.2x) compared to the estimated Fair Price-To-Earnings Ratio (28.3x).
Share Price vs Fair Value
What is the Fair Price of DVA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: DVA ($92.92) is trading below our estimate of fair value ($256.69)
Significantly Below Fair Value: DVA is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
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Future Growth
How is DaVita forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?
Future Growth Score
1/6Future Growth Score 1/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE
9.8%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: DVA's forecast earnings growth (9.8% per year) is above the savings rate (1.9%).
Earnings vs Market: DVA's earnings (9.8% per year) are forecast to grow slower than the US market (14.5% per year).
High Growth Earnings: DVA's earnings are forecast to grow, but not significantly.
Revenue vs Market: DVA's revenue (5% per year) is forecast to grow slower than the US market (7.9% per year).
High Growth Revenue: DVA's revenue (5% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: Insufficient data to determine if DVA's Return on Equity is forecast to be high in 3 years time
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Past Performance
How has DaVita performed over the past 5 years?
Past Performance Score
1/6Past Performance Score 1/6
Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE
-0.5%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: DVA has high quality earnings.
Growing Profit Margin: DVA's current net profit margins (7.2%) are lower than last year (7.6%).
Past Earnings Growth Analysis
Earnings Trend: DVA's earnings have declined by 0.5% per year over the past 5 years.
Accelerating Growth: DVA's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.
Earnings vs Industry: DVA had negative earnings growth (-5.6%) over the past year, making it difficult to compare to the Healthcare industry average (8.1%).
Return on Equity
High ROE: Whilst DVA's Return on Equity (49.03%) is outstanding, this metric is skewed due to their high level of debt.
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Financial Health
How is DaVita's financial position?
Financial Health Score
2/6Financial Health Score 2/6
Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage
Financial Position Analysis
Short Term Liabilities: DVA's short term assets ($3.3B) exceed its short term liabilities ($2.3B).
Long Term Liabilities: DVA's short term assets ($3.3B) do not cover its long term liabilities ($12.6B).
Debt to Equity History and Analysis
Debt Level: DVA's net debt to equity ratio (398.6%) is considered high.
Reducing Debt: DVA's debt to equity ratio has increased from 140% to 415.4% over the past 5 years.
Debt Coverage: DVA's debt is not well covered by operating cash flow (17.9%).
Interest Coverage: DVA's interest payments on its debt are well covered by EBIT (5.4x coverage).
Balance Sheet
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Dividend
What is DaVita current dividend yield, its reliability and sustainability?
Dividend Score
0/6Dividend Score 0/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
3.71%
Forecast Dividend Yield
Dividend Yield vs Market
Notable Dividend: Unable to evaluate DVA's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.
High Dividend: Unable to evaluate DVA's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if DVA's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if DVA's dividend payments have been increasing.
Earnings Payout to Shareholders
Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: Unable to calculate sustainability of dividends as DVA has not reported any payouts.
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Management
How experienced are the management team and are they aligned to shareholders interests?
6.3yrs
Average management tenure
CEO
Javier Rodriguez (51 yo)
3.17yrs
Tenure
US$3,298,439
Compensation
Mr. Javier J. Rodriguez serves as an Independent Director at Gilead Sciences, Inc. since June 15, 2020. He has been Chief Executive Officer and Executive Director of DaVita Inc. since June 1, 2019. Mr. Rod...
CEO Compensation Analysis
Compensation vs Market: Javier's total compensation ($USD3.30M) is below average for companies of similar size in the US market ($USD8.11M).
Compensation vs Earnings: Javier's compensation has been consistent with company performance over the past year.
Leadership Team
Experienced Management: DVA's management team is seasoned and experienced (6.3 years average tenure).
Board Members
Experienced Board: DVA's board of directors are considered experienced (6.8 years average tenure).
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: DVA insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
Ownership Breakdown
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Top Shareholders
Company Information
DaVita Inc.'s employee growth, exchange listings and data sources
Key Information
- Name: DaVita Inc.
- Ticker: DVA
- Exchange: NYSE
- Founded: 1994
- Industry: Health Care Services
- Sector: Healthcare
- Implied Market Cap: US$8.484b
- Shares outstanding: 91.30m
- Website: https://www.davita.com
Number of Employees
Location
- DaVita Inc.
- 2000 16th Street
- Denver
- Colorado
- 80202
- United States
Listings
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/08/16 00:00 |
| End of Day Share Price | 2022/08/16 00:00 |
| Earnings | 2022/06/30 |
| Annual Earnings | 2021/12/31 |
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.