DaVita Inc (DVA, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $91.09, DaVita Inc has witnessed a daily gain of 2.93%, marked against a three-month change of -12.35%. A thorough analysis, underlined by the GF Score, suggests that DaVita Inc is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
DaVita Inc's GF Score components are as follows:
- Financial strength rank: 4/10
- Profitability rank: 9/10
- Growth rank: 9/10
- GF Value rank: 9/10
- Momentum rank: 9/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. Despite a slightly lower financial strength rank, GuruFocus assigned DaVita Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding DaVita Inc's Business
DaVita Inc, with a market cap of $8.32 billion and sales of $11.74 billion, is the largest provider of dialysis services in the United States, boasting a market share that eclipses 35% when measured by both patients and clinics. The firm operates over 3,000 facilities worldwide, mostly in the U.S., and treats over 240,000 patients globally each year. DaVita receives about two thirds of U.S. sales at government (primarily Medicare) reimbursement rates, with the remainder coming from commercial insurers. However, while commercial insurers represented only about 10% of the U.S. patients treated, they represent nearly all of the profits generated by DaVita in the U.S. dialysis business.
Profitability Rank Breakdown
The Profitability Rank shows DaVita Inc's impressive standing among its peers in generating profit. Furthermore, DaVita Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2018: 28.14; 2019: 30.50; 2020: 30.84; 2021: 31.38; 2022: 29.29; . This trend underscores the company's growing proficiency in transforming revenue into profit. DaVita Inc's strong Predictability Rank of 3.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, DaVita Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 17.8%, which outperforms better than 71.38% of 566 companies in the Healthcare Providers & Services industry. Moreover, DaVita Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 13.5, and the rate over the past five years is 13.1. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given DaVita Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health and its potential to deliver substantial returns to investors. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
