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

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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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

DaVita HealthCare (DVA - Free Report) is a stock many investors are watching right now. DVA is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 13.20, which compares to its industry's average of 19.22. Over the last 12 months, DVA's Forward P/E has been as high as 14.50 and as low as 9.37, with a median of 11.58.

DVA is also sporting a PEG ratio of 0.57. 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 1.46. DVA's PEG has been as high as 0.75 and as low as 0.42, with a median of 0.53, all within the past year.

Investors should also recognize that DVA has a P/B ratio of 4.67. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. DVA's current P/B looks attractive when compared to its industry's average P/B of 6.30. Over the past year, DVA's P/B has been as high as 4.68 and as low as 1.77, with a median of 2.30.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DVA has a P/S ratio of 0.82. This compares to its industry's average P/S of 1.21.

Finally, investors should note that DVA has a P/CF ratio of 10.78. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 31.85. Within the past 12 months, DVA's P/CF has been as high as 14.30 and as low as 6.61, with a median of 12.15.

Value investors will likely look at more than just these metrics, but the above data helps show that DaVita HealthCare is likely undervalued currently. And when considering the strength of its earnings outlook, DVA sticks out at as one of the market's strongest value stocks.


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