Today we're going to take a look at the well-established DaVita Inc. (NYSE:DVA). The company's stock saw a decent share price growth of 14% on the NYSE over the last few months. The recent jump in the share price has meant that the company is trading around its 52-week high. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. But what if there is still an opportunity to buy? Let's take a look at DaVita's outlook and value based on the most recent financial data to see if the opportunity still exists.
What's The Opportunity In DaVita?
The stock is currently trading at US$143 on the share market, which means it is overvalued by 22% compared to our intrinsic value of $117.49. This means that the opportunity to buy DaVita at a good price has disappeared! Another thing to keep in mind is that DaVita's share price is quite stable relative to the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it's there, it may be hard to fall back down into an attractive buying range again.
What kind of growth will DaVita generate?
Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of DaVita, it is expected to deliver a relatively unexciting earnings growth of 2.1%, which doesn't help build up its investment thesis. Growth doesn't appear to be a main reason for a buy decision for the company, at least in the near term.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in DVA's future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe DVA should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you've been keeping an eye on DVA for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there's no upside from mispricing. However, the positive outlook means it's worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about DaVita as a business, it's important to be aware of any risks it's facing. For example, we've found that DaVita has 2 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.
If you are no longer interested in DaVita, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.