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Should Value Investors Buy DaVita (DVA) Stock?

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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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is DaVita (DVA - Free Report) . 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 14.86 right now. For comparison, its industry sports an average P/E of 21.50. Over the past 52 weeks, DVA's Forward P/E has been as high as 15.26 and as low as 9.57, with a median of 13.75.

DVA is also sporting a PEG ratio of 0.85. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DVA's PEG compares to its industry's average PEG of 1.75. Within the past year, DVA's PEG has been as high as 1.26 and as low as 0.56, with a median of 0.97.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DVA has a P/S ratio of 1.09. This compares to its industry's average P/S of 1.51.

These are only a few of the key metrics included in DaVita'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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