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What Do Analysts Think About The Future Of DaVita Inc’s (NYSE:DVA)?

Since DaVita Inc (NYSE:DVA) released its earnings in June 2018, analysts seem cautiously bearish, as a 8.6% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 9.8%. With trailing-twelve-month net income at current levels of US$698.2m, we should see this rise to US$758.4m in 2019. Below is a brief commentary on the longer term outlook the market has for DaVita. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for DaVita

Exciting times ahead?

Longer term expectations from the 11 analysts covering DVA’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:DVA Future Profit September 7th 18
NYSE:DVA Future Profit September 7th 18

From the current net income level of US$909.0m and the final forecast of US$1.28b by 2021, the annual rate of growth for DVA’s earnings is 13.8%. This leads to an EPS of $6.94 in the final year of projections relative to the current EPS of $4.82. The main reason for growth is a result of cost cutting activities, as revenues is expected to grow much slower than earnings. With a current profit margin of 8.4%, this movement will result in a margin of 10.0% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For DaVita, there are three essential aspects you should look at:

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  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Valuation: What is DaVita worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DaVita is currently mispriced by the market.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of DaVita? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.