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Should Value Investors Buy DaVita HealthCare (DVA) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

DaVita HealthCare (DVA - Free Report) is a stock many investors are watching right now. DVA is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 12.47, which compares to its industry's average of 20.23. Over the past 52 weeks, DVA's Forward P/E has been as high as 15.61 and as low as 10.40, with a median of 12.66.

DVA is also sporting a PEG ratio of 1.32. 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 1.96. Over the past 52 weeks, DVA's PEG has been as high as 1.59 and as low as 0.49, with a median of 0.61.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DVA has a P/S ratio of 0.92. This compares to its industry's average P/S of 1.18.

Finally, our model also underscores that DVA has a P/CF ratio of 7.46. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. DVA's current P/CF looks attractive when compared to its industry's average P/CF of 26.35. Over the past 52 weeks, DVA's P/CF has been as high as 14.30 and as low as 5.46, with a median of 7.38.

These are just a handful of the figures considered in DaVita HealthCare's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DVA is an impressive value stock right now.


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