Intrinsic value of DaVita - DVA

Previous Close

$57.34

  Intrinsic Value

$120.14

stock screener

  Rating & Target

str. buy

+110%

  Value-price divergence*

+22%

Previous close

$57.34

 
Intrinsic value

$120.14

 
Up/down potential

+110%

 
Rating

str. buy

 
Value-price divergence*

+22%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DVA stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 11.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.99
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
Revenue, $m
  14,745
  15,217
  15,731
  16,288
  16,889
  17,534
  18,224
  18,961
  19,746
  20,580
  21,466
  22,404
  23,398
  24,449
  25,560
  26,732
  27,970
  29,275
  30,651
  32,101
  33,628
  35,236
  36,928
  38,709
  40,583
  42,553
  44,626
  46,806
  49,097
  51,505
  54,037
Variable operating expenses, $m
 
  3,759
  3,854
  3,957
  4,069
  4,188
  4,316
  4,452
  4,598
  4,752
  4,916
  4,149
  4,333
  4,528
  4,734
  4,951
  5,180
  5,422
  5,677
  5,945
  6,228
  6,526
  6,839
  7,169
  7,516
  7,881
  8,265
  8,668
  9,093
  9,539
  10,008
Fixed operating expenses, $m
 
  9,640
  9,881
  10,128
  10,381
  10,641
  10,907
  11,180
  11,459
  11,746
  12,039
  12,340
  12,649
  12,965
  13,289
  13,621
  13,962
  14,311
  14,669
  15,035
  15,411
  15,796
  16,191
  16,596
  17,011
  17,436
  17,872
  18,319
  18,777
  19,246
  19,728
Total operating expenses, $m
  12,851
  13,399
  13,735
  14,085
  14,450
  14,829
  15,223
  15,632
  16,057
  16,498
  16,955
  16,489
  16,982
  17,493
  18,023
  18,572
  19,142
  19,733
  20,346
  20,980
  21,639
  22,322
  23,030
  23,765
  24,527
  25,317
  26,137
  26,987
  27,870
  28,785
  29,736
Operating income, $m
  1,895
  1,818
  1,996
  2,203
  2,439
  2,705
  3,002
  3,329
  3,689
  4,083
  4,510
  5,915
  6,416
  6,956
  7,537
  8,160
  8,828
  9,543
  10,306
  11,120
  11,989
  12,913
  13,897
  14,944
  16,056
  17,236
  18,489
  19,818
  21,227
  22,720
  24,302
EBITDA, $m
  2,615
  3,002
  3,189
  3,405
  3,651
  3,927
  4,234
  4,574
  4,947
  5,353
  5,795
  6,274
  6,791
  7,348
  7,947
  8,589
  9,276
  10,012
  10,797
  11,635
  12,528
  13,478
  14,489
  15,564
  16,706
  17,918
  19,204
  20,568
  22,014
  23,546
  25,168
Interest expense (income), $m
  407
  403
  422
  444
  468
  493
  521
  550
  581
  615
  650
  688
  728
  770
  815
  862
  912
  964
  1,020
  1,078
  1,140
  1,205
  1,273
  1,345
  1,421
  1,500
  1,584
  1,672
  1,765
  1,862
  1,964
Earnings before tax, $m
  1,489
  1,415
  1,574
  1,759
  1,971
  2,212
  2,481
  2,779
  3,108
  3,468
  3,860
  5,227
  5,688
  6,186
  6,722
  7,298
  7,916
  8,578
  9,286
  10,042
  10,849
  11,709
  12,624
  13,599
  14,635
  15,736
  16,905
  18,146
  19,462
  20,858
  22,337
Tax expense, $m
  456
  382
  425
  475
  532
  597
  670
  750
  839
  936
  1,042
  1,411
  1,536
  1,670
  1,815
  1,971
  2,137
  2,316
  2,507
  2,711
  2,929
  3,161
  3,409
  3,672
  3,951
  4,249
  4,564
  4,899
  5,255
  5,632
  6,031
Net income, $m
  880
  1,033
  1,149
  1,284
  1,439
  1,615
  1,811
  2,029
  2,269
  2,531
  2,818
  3,816
  4,152
  4,516
  4,907
  5,328
  5,779
  6,262
  6,779
  7,331
  7,920
  8,547
  9,216
  9,927
  10,684
  11,487
  12,341
  13,247
  14,208
  15,226
  16,306

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,223
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  18,741
  18,072
  18,683
  19,345
  20,058
  20,824
  21,644
  22,519
  23,451
  24,442
  25,494
  26,609
  27,789
  29,037
  30,356
  31,749
  33,218
  34,769
  36,403
  38,124
  39,938
  41,847
  43,857
  45,973
  48,198
  50,539
  53,000
  55,589
  58,310
  61,170
  64,177
Adjusted assets (=assets-cash), $m
  17,518
  18,072
  18,683
  19,345
  20,058
  20,824
  21,644
  22,519
  23,451
  24,442
  25,494
  26,609
  27,789
  29,037
  30,356
  31,749
  33,218
  34,769
  36,403
  38,124
  39,938
  41,847
  43,857
  45,973
  48,198
  50,539
  53,000
  55,589
  58,310
  61,170
  64,177
Revenue / Adjusted assets
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
  0.842
Average production assets, $m
  4,590
  4,732
  4,892
  5,066
  5,252
  5,453
  5,668
  5,897
  6,141
  6,401
  6,676
  6,968
  7,277
  7,604
  7,949
  8,314
  8,699
  9,105
  9,532
  9,983
  10,458
  10,958
  11,485
  12,038
  12,621
  13,234
  13,879
  14,557
  15,269
  16,018
  16,806
Working capital, $m
  1,284
  228
  236
  244
  253
  263
  273
  284
  296
  309
  322
  336
  351
  367
  383
  401
  420
  439
  460
  482
  504
  529
  554
  581
  609
  638
  669
  702
  736
  773
  811
Total debt, $m
  9,112
  9,386
  9,872
  10,398
  10,965
  11,574
  12,226
  12,922
  13,663
  14,451
  15,287
  16,173
  17,111
  18,103
  19,152
  20,259
  21,428
  22,660
  23,959
  25,328
  26,770
  28,288
  29,886
  31,567
  33,336
  35,197
  37,154
  39,212
  41,375
  43,649
  46,040
Total liabilities, $m
  14,093
  14,367
  14,853
  15,379
  15,946
  16,555
  17,207
  17,903
  18,644
  19,432
  20,268
  21,154
  22,092
  23,084
  24,133
  25,240
  26,409
  27,641
  28,940
  30,309
  31,751
  33,269
  34,867
  36,548
  38,317
  40,178
  42,135
  44,193
  46,356
  48,630
  51,021
Total equity, $m
  4,648
  3,705
  3,830
  3,966
  4,112
  4,269
  4,437
  4,616
  4,808
  5,011
  5,226
  5,455
  5,697
  5,953
  6,223
  6,508
  6,810
  7,128
  7,463
  7,816
  8,187
  8,579
  8,991
  9,424
  9,881
  10,360
  10,865
  11,396
  11,954
  12,540
  13,156
Total liabilities and equity, $m
  18,741
  18,072
  18,683
  19,345
  20,058
  20,824
  21,644
  22,519
  23,452
  24,443
  25,494
  26,609
  27,789
  29,037
  30,356
  31,748
  33,219
  34,769
  36,403
  38,125
  39,938
  41,848
  43,858
  45,972
  48,198
  50,538
  53,000
  55,589
  58,310
  61,170
  64,177
Debt-to-equity ratio
  1.960
  2.530
  2.580
  2.620
  2.670
  2.710
  2.760
  2.800
  2.840
  2.880
  2.920
  2.960
  3.000
  3.040
  3.080
  3.110
  3.150
  3.180
  3.210
  3.240
  3.270
  3.300
  3.320
  3.350
  3.370
  3.400
  3.420
  3.440
  3.460
  3.480
  3.500
Adjusted equity ratio
  0.196
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  880
  1,033
  1,149
  1,284
  1,439
  1,615
  1,811
  2,029
  2,269
  2,531
  2,818
  3,816
  4,152
  4,516
  4,907
  5,328
  5,779
  6,262
  6,779
  7,331
  7,920
  8,547
  9,216
  9,927
  10,684
  11,487
  12,341
  13,247
  14,208
  15,226
  16,306
Depreciation, amort., depletion, $m
  720
  1,185
  1,193
  1,202
  1,211
  1,222
  1,233
  1,245
  1,257
  1,271
  1,285
  359
  375
  392
  410
  429
  448
  469
  491
  515
  539
  565
  592
  621
  651
  682
  715
  750
  787
  826
  866
Funds from operations, $m
  2,165
  2,218
  2,342
  2,486
  2,650
  2,836
  3,044
  3,273
  3,526
  3,802
  4,103
  4,175
  4,528
  4,908
  5,317
  5,756
  6,227
  6,731
  7,270
  7,845
  8,459
  9,112
  9,808
  10,548
  11,334
  12,169
  13,056
  13,997
  14,995
  16,052
  17,173
Change in working capital, $m
  202
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
Cash from operations, $m
  1,963
  2,211
  2,334
  2,477
  2,641
  2,827
  3,033
  3,262
  3,514
  3,790
  4,089
  4,161
  4,513
  4,892
  5,300
  5,739
  6,209
  6,712
  7,250
  7,824
  8,436
  9,088
  9,782
  10,521
  11,306
  12,140
  13,025
  13,964
  14,960
  16,016
  17,135
Maintenance CAPEX, $m
  0
  -237
  -244
  -252
  -261
  -271
  -281
  -292
  -304
  -317
  -330
  -344
  -359
  -375
  -392
  -410
  -429
  -448
  -469
  -491
  -515
  -539
  -565
  -592
  -621
  -651
  -682
  -715
  -750
  -787
  -826
New CAPEX, $m
  -829
  -142
  -160
  -173
  -187
  -201
  -215
  -229
  -244
  -259
  -275
  -292
  -309
  -327
  -345
  -365
  -385
  -406
  -428
  -451
  -475
  -500
  -526
  -554
  -583
  -613
  -645
  -678
  -713
  -749
  -787
Cash from investing activities, $m
  -1,202
  -379
  -404
  -425
  -448
  -472
  -496
  -521
  -548
  -576
  -605
  -636
  -668
  -702
  -737
  -775
  -814
  -854
  -897
  -942
  -990
  -1,039
  -1,091
  -1,146
  -1,204
  -1,264
  -1,327
  -1,393
  -1,463
  -1,536
  -1,613
Free cash flow, $m
  761
  1,832
  1,930
  2,052
  2,193
  2,355
  2,538
  2,741
  2,966
  3,214
  3,484
  3,525
  3,844
  4,190
  4,563
  4,964
  5,395
  5,858
  6,352
  6,881
  7,446
  8,049
  8,691
  9,375
  10,103
  10,876
  11,698
  12,571
  13,497
  14,480
  15,522
Issuance/(repayment) of debt, $m
  -124
  439
  486
  526
  567
  609
  652
  696
  741
  788
  836
  886
  938
  992
  1,049
  1,107
  1,168
  1,232
  1,299
  1,369
  1,442
  1,518
  1,598
  1,682
  1,769
  1,861
  1,957
  2,058
  2,163
  2,274
  2,390
Issuance/(repurchase) of shares, $m
  -1,061
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,352
  439
  486
  526
  567
  609
  652
  696
  741
  788
  836
  886
  938
  992
  1,049
  1,107
  1,168
  1,232
  1,299
  1,369
  1,442
  1,518
  1,598
  1,682
  1,769
  1,861
  1,957
  2,058
  2,163
  2,274
  2,390
Total cash flow (excl. dividends), $m
  -586
  2,271
  2,416
  2,578
  2,761
  2,964
  3,189
  3,437
  3,707
  4,001
  4,320
  4,411
  4,783
  5,182
  5,612
  6,072
  6,564
  7,090
  7,651
  8,250
  8,888
  9,567
  10,289
  11,057
  11,872
  12,737
  13,655
  14,629
  15,661
  16,754
  17,912
Retained Cash Flow (-), $m
  223
  -115
  -125
  -136
  -146
  -157
  -168
  -179
  -191
  -203
  -216
  -229
  -242
  -256
  -270
  -286
  -301
  -318
  -335
  -353
  -372
  -391
  -412
  -434
  -456
  -480
  -505
  -531
  -558
  -586
  -616
Prev. year cash balance distribution, $m
 
  1,058
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,214
  2,290
  2,442
  2,614
  2,807
  3,021
  3,257
  3,516
  3,798
  4,105
  4,182
  4,541
  4,927
  5,341
  5,786
  6,263
  6,772
  7,316
  7,897
  8,516
  9,176
  9,877
  10,623
  11,416
  12,257
  13,151
  14,098
  15,103
  16,168
  17,296
Discount rate, %
 
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
  34.58
PV of cash for distribution, $m
 
  2,965
  1,934
  1,872
  1,804
  1,727
  1,640
  1,544
  1,439
  1,325
  1,206
  1,020
  907
  793
  682
  576
  477
  387
  308
  239
  181
  134
  97
  68
  46
  31
  20
  12
  7
  4
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

DaVita Inc. provides kidney dialysis services for patients suffering from chronic kidney failure or end stage renal disease (ESRD). It operates through two divisions, DaVita Kidney Care and DaVita Medical Group. The company operates kidney dialysis centers and provides related lab services in outpatient dialysis centers. It also provides outpatient, hospital inpatient, and home-based hemodialysis services; owns clinical laboratories that provide routine laboratory tests for dialysis and other physician-prescribed laboratory tests for ESRD patients; and management and administrative services to outpatient dialysis centers, as well as patient and physician focused integrated health care delivery and management services. In addition, the company operates DaVita Rx, a pharmacy that provides oral medications to patients with ESRD; disease management services; vascular access services; clinical research programs; physician services; and direct primary care services. As of December 31, 2016, it provided dialysis and administrative services in the United States through a network of 2,350 outpatient dialysis centers serving approximately 187,700 patients; and operated 154 outpatient dialysis centers located in 11 countries outside of the United States. Further, the company provides acute inpatient dialysis services in approximately 900 hospitals and related laboratory services in the United States. The company was formerly known as DaVita HealthCare Partners Inc. and changed its name to DaVita Inc. in September 2016. DaVita Inc. was founded in 1994 and is headquartered in Denver, Colorado.

FINANCIAL RATIOS  of  DaVita (DVA)

Valuation Ratios
P/E Ratio 12.7
Price to Sales 0.8
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 5.7
Price to Free Cash Flow 9.8
Growth Rates
Sales Growth Rate 7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17.1%
Cap. Spend. - 3 Yr. Gr. Rate 6.1%
Financial Strength
Quick Ratio 7
Current Ratio 0
LT Debt to Equity 192.5%
Total Debt to Equity 196%
Interest Coverage 5
Management Effectiveness
Return On Assets 6.2%
Ret/ On Assets - 3 Yr. Avg. 4.9%
Return On Total Capital 6.3%
Ret/ On T. Cap. - 3 Yr. Avg. 4.6%
Return On Equity 18.5%
Return On Equity - 3 Yr. Avg. 13%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 27.8%
Gross Margin - 3 Yr. Avg. 28.4%
EBITDA Margin 17.7%
EBITDA Margin - 3 Yr. Avg. 16.1%
Operating Margin 12.8%
Oper. Margin - 3 Yr. Avg. 11.8%
Pre-Tax Margin 10.1%
Pre-Tax Margin - 3 Yr. Avg. 8.5%
Net Profit Margin 6%
Net Profit Margin - 3 Yr. Avg. 4.5%
Effective Tax Rate 30.6%
Eff/ Tax Rate - 3 Yr. Avg. 35.2%
Payout Ratio 0%

DVA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DVA stock intrinsic value calculation we used $14745 million for the last fiscal year's total revenue generated by DaVita. The default revenue input number comes from 2016 income statement of DaVita. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DVA stock valuation model: a) initial revenue growth rate of 3.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.4%, whose default value for DVA is calculated based on our internal credit rating of DaVita, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of DaVita.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DVA stock the variable cost ratio is equal to 24.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9405 million in the base year in the intrinsic value calculation for DVA stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.5% for DaVita.

Corporate tax rate of 27% is the nominal tax rate for DaVita. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DVA stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DVA are equal to 31.1%.

Life of production assets of 19.4 years is the average useful life of capital assets used in DaVita operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DVA is equal to 1.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4648 million for DaVita - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 195.171 million for DaVita is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of DaVita at the current share price and the inputted number of shares is $11.2 billion.

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COMPANY NEWS

▶ 3 Warren Buffett Stocks to Buy Right Now   [Aug-16-17 03:42PM  Motley Fool]
▶ Buy It Like Buffett -- or Better   [Aug-03-17 02:30PM  TheStreet.com]
▶ DaVita HealthCare beats Street 2Q forecasts   [Aug-01-17 10:58PM  Associated Press]
▶ DaVita Inc. 2nd Quarter 2017 Results   [04:01PM  PR Newswire]
▶ 3 Growth Stocks for Savvy Investors   [Jul-31-17 04:25PM  Motley Fool]
▶ DaVita CEO Thiry ends speculation regarding 2018 gubernatorial bid   [Jul-24-17 06:40PM  American City Business Journals]
▶ Warren Buffett's 5 Highest-Quality Companies   [05:34PM  GuruFocus.com]
▶ Is DaVita a Suitable Stock for Value Investors?   [Jun-20-17 09:50AM  Zacks]
▶ ETFs with exposure to DaVita, Inc. : June 19, 2017   [Jun-19-17 03:13PM  Capital Cube]
▶ Health-Care Investors Are in Denial   [07:30AM  Bloomberg]
▶ ETFs with exposure to DaVita, Inc. : June 8, 2017   [Jun-08-17 01:32PM  Capital Cube]
▶ HealthCare Partners to Acquire Magan Medical Clinic   [Jun-01-17 08:13AM  PR Newswire]
▶ DaVita acquires Polish dialysis company   [May-25-17 02:45PM  American City Business Journals]
▶ Paul Tudor Jones' Top 4 Health Care Buys   [May-18-17 04:05PM  GuruFocus.com]
▶ DaVita Supports World Hypertension Day   [May-17-17 11:55AM  PR Newswire]
▶ Advisory Board alum raises $5 million for his kidney care startup   [05:20AM  American City Business Journals]
▶ Business-backed open primary elections are about to become Colorado law   [May-10-17 09:14AM  American City Business Journals]
▶ The 3 Best Buffett Stocks for Retirees   [04:02PM  Motley Fool]
▶ DaVita Acquires Purity Dialysis   [May-08-17 08:10AM  PR Newswire]
▶ DaVita Celebrates National Nurses Week   [08:06AM  PR Newswire]
▶ DaVita HealthCare misses 1Q profit forecasts   [May-02-17 04:50PM  Associated Press]
▶ DaVita Announces 2017 Capital Markets Day   [Apr-28-17 10:06AM  PR Newswire]
▶ DaVita Service Event Sets GUINNESS WORLD RECORDS Title   [Apr-27-17 06:13AM  PR Newswire]
▶ DaVita to Commence 18th Annual Event Today   [Apr-26-17 02:06PM  PR Newswire]
▶ DaVita Participates in Community Service Month   [Apr-20-17 06:00AM  PR Newswire]
▶ Major DaVita Medical building acquired by out-of-state company   [Apr-19-17 09:59AM  American City Business Journals]
▶ DaVita, Inc. Value Analysis (NYSE:DVA) : April 12, 2017   [Apr-12-17 01:23PM  Capital Cube]
▶ DaVita Names New President of International   [Apr-10-17 01:00AM  PR Newswire]
▶ 10 Most Profitable For Profit Hospitals in America   [Mar-31-17 05:05PM  at Insider Monkey]
Stock chart of DVA Financial statements of DVA
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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