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Will Q4 Earnings Hold a Surprise for DaVita (DVA) Stock?
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DaVita HealthCare Partners Inc. (DVA - Free Report) is set to report fourth-quarter 2016 results after market close on Feb 9.
DaVita HealthCare has an impressive track of comfortably beating estimates in each of the four trailing quarters. In the last reported quarter, it recorded a positive earnings surprise of 1.06%, bringing the four-quarter average to 3.77%. Over the past one month, DaVita HealthCare returned almost 1.96%, which is marginally higher than the Zacks categorized Medical - Outpatient and Home Healthcare sub-industry’s gain of roughly 1.95%. Also, DaVita HealthCare has a decent earnings surprise history, as evident from the chart below.
DaVita HealthCare Partners Inc. Price and EPS Surprise
Our quantitative model shows that DaVita HealthCare is likely to beat earnings because it has the perfect combination of two key ingredients. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +4.40%. This is because the Most Accurate estimate of 95 cents is pegged higher than the Zacks Consensus Estimate of 91 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: DaVita carries a Zacks Rank #3.
The combination of DaVita’s favorable Zacks Rank and positive ESP makes us reasonably confident of an earnings beat.
Factors to be Considered this Quarter
Davita’s Kidney Care is expected to have performed well in the fourth quarter due to its continuous investments in capital-efficient technologies. Launch of new de novo clinics, which is a clear instance of this, is likely to have significantly boosted the top line of this segment. Growth in Kidney Care is also likely have been supported by two legislations, namely Dialysis PATIENT Demonstration Act and ESRD Choice Act. Both these acts are expected to have bolstered Davita’s long-term strategy of integrated care.
The joint venture with Khazanah and Mitsui Khazanah might have further driven growth of Davita’s Kidney Care business. The expansion of the Affordable Care Act is expected to have boosted Davita’s revenues through increased market share. Operating cash flow is expected to have remained strong in the quarter due to improved performance of the Kidney Care business and the capitated care business.
The company’s projected range of operating income for Kidney Care is $1.695–$1.725 billion. Overall, the company expects Operating cash flow for 2016 in the range of $1.750–$1.850 billion.
Stocks to Consider
Here are some medical stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Summit Therapeutics Plc. (SMMT - Free Report) has an Earnings ESP of +29.58% and a Zacks Rank #1.
UnitedHealth Group Incorporated (UNH - Free Report) has an Earnings ESP of +0.92% and a Zacks Rank #2.
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Will Q4 Earnings Hold a Surprise for DaVita (DVA) Stock?
DaVita HealthCare Partners Inc. (DVA - Free Report) is set to report fourth-quarter 2016 results after market close on Feb 9.
DaVita HealthCare has an impressive track of comfortably beating estimates in each of the four trailing quarters. In the last reported quarter, it recorded a positive earnings surprise of 1.06%, bringing the four-quarter average to 3.77%. Over the past one month, DaVita HealthCare returned almost 1.96%, which is marginally higher than the Zacks categorized Medical - Outpatient and Home Healthcare sub-industry’s gain of roughly 1.95%. Also, DaVita HealthCare has a decent earnings surprise history, as evident from the chart below.
DaVita HealthCare Partners Inc. Price and EPS Surprise
DaVita HealthCare Partners Inc. Price and EPS Surprise | DaVita HealthCare Partners Inc. Quote
Earnings Whispers
Our quantitative model shows that DaVita HealthCare is likely to beat earnings because it has the perfect combination of two key ingredients. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +4.40%. This is because the Most Accurate estimate of 95 cents is pegged higher than the Zacks Consensus Estimate of 91 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: DaVita carries a Zacks Rank #3.
The combination of DaVita’s favorable Zacks Rank and positive ESP makes us reasonably confident of an earnings beat.
Factors to be Considered this Quarter
Davita’s Kidney Care is expected to have performed well in the fourth quarter due to its continuous investments in capital-efficient technologies. Launch of new de novo clinics, which is a clear instance of this, is likely to have significantly boosted the top line of this segment. Growth in Kidney Care is also likely have been supported by two legislations, namely Dialysis PATIENT Demonstration Act and ESRD Choice Act. Both these acts are expected to have bolstered Davita’s long-term strategy of integrated care.
The joint venture with Khazanah and Mitsui Khazanah might have further driven growth of Davita’s Kidney Care business. The expansion of the Affordable Care Act is expected to have boosted Davita’s revenues through increased market share. Operating cash flow is expected to have remained strong in the quarter due to improved performance of the Kidney Care business and the capitated care business.
The company’s projected range of operating income for Kidney Care is $1.695–$1.725 billion. Overall, the company expects Operating cash flow for 2016 in the range of $1.750–$1.850 billion.
Stocks to Consider
Here are some medical stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Lannett Company, Inc. has an Earnings ESP of +2.35% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Summit Therapeutics Plc. (SMMT - Free Report) has an Earnings ESP of +29.58% and a Zacks Rank #1.
UnitedHealth Group Incorporated (UNH - Free Report) has an Earnings ESP of +0.92% and a Zacks Rank #2.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>