Is DaVita (DVA) Stock Undervalued Right Now?

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is DaVita (DVA). DVA is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 10.65. This compares to its industry's average Forward P/E of 18.96. DVA's Forward P/E has been as high as 15.44 and as low as 10.48, with a median of 13.17, all within the past year.

Investors will also notice that DVA has a PEG ratio of 0.83. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DVA's PEG compares to its industry's average PEG of 1.88. DVA's PEG has been as high as 1.09 and as low as 0.69, with a median of 0.87, all within the past year.

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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DVA has a P/S ratio of 0.74. This compares to its industry's average P/S of 1.59.

These figures are just a handful of the metrics value investors tend to look at, but they help show that DaVita is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DVA feels like a great value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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