Intrinsic value of DaVita - DVA

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$68.82

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$68.82

 
Intrinsic value

$159.83

 
Up/down potential

+132%

 
Rating

str. buy

 
Value-price divergence* premium content

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*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 13.3

 

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
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.00
Revenue, $m
  14,745
  15,497
  16,286
  17,113
  17,981
  18,892
  19,848
  20,851
  21,904
  23,008
  24,167
  25,384
  26,661
  28,002
  29,409
  30,886
  32,437
  34,065
  35,774
  37,568
  39,451
  41,429
  43,505
  45,684
  47,973
  50,375
  52,897
  55,546
  58,326
  61,246
  64,311
Variable operating expenses, $m
 
  3,811
  3,957
  4,110
  4,271
  4,440
  4,617
  4,802
  4,997
  5,202
  5,417
  4,701
  4,938
  5,186
  5,447
  5,720
  6,007
  6,309
  6,625
  6,958
  7,306
  7,673
  8,057
  8,461
  8,885
  9,330
  9,797
  10,287
  10,802
  11,343
  11,910
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
  13,451
  13,838
  14,238
  14,652
  15,081
  15,524
  15,982
  16,456
  16,948
  17,456
  17,041
  17,587
  18,151
  18,736
  19,341
  19,969
  20,620
  21,294
  21,993
  22,717
  23,469
  24,248
  25,057
  25,896
  26,766
  27,669
  28,606
  29,579
  30,589
  31,638
Operating income, $m
  1,895
  2,046
  2,448
  2,875
  3,329
  3,812
  4,325
  4,869
  5,447
  6,061
  6,712
  8,343
  9,075
  9,851
  10,674
  11,545
  12,468
  13,445
  14,480
  15,575
  16,734
  17,960
  19,256
  20,627
  22,077
  23,609
  25,228
  26,939
  28,747
  30,656
  32,673
EBITDA, $m
  2,615
  3,235
  3,650
  4,090
  4,558
  5,055
  5,583
  6,144
  6,739
  7,370
  8,040
  8,750
  9,502
  10,300
  11,145
  12,040
  12,988
  13,991
  15,053
  16,177
  17,366
  18,624
  19,954
  21,360
  22,846
  24,417
  26,076
  27,830
  29,682
  31,638
  33,704
Interest expense (income), $m
  407
  403
  434
  468
  503
  540
  579
  619
  662
  706
  753
  803
  854
  909
  966
  1,025
  1,088
  1,154
  1,223
  1,296
  1,372
  1,452
  1,536
  1,624
  1,717
  1,814
  1,916
  2,023
  2,136
  2,254
  2,378
Earnings before tax, $m
  1,489
  1,643
  2,014
  2,407
  2,826
  3,272
  3,746
  4,250
  4,785
  5,354
  5,958
  7,540
  8,221
  8,942
  9,708
  10,520
  11,380
  12,291
  13,257
  14,279
  15,362
  16,508
  17,720
  19,003
  20,360
  21,795
  23,312
  24,916
  26,611
  28,402
  30,295
Tax expense, $m
  456
  444
  544
  650
  763
  883
  1,011
  1,147
  1,292
  1,446
  1,609
  2,036
  2,220
  2,414
  2,621
  2,840
  3,073
  3,319
  3,579
  3,855
  4,148
  4,457
  4,784
  5,131
  5,497
  5,885
  6,294
  6,727
  7,185
  7,669
  8,180
Net income, $m
  880
  1,200
  1,470
  1,757
  2,063
  2,389
  2,735
  3,102
  3,493
  3,909
  4,350
  5,504
  6,001
  6,528
  7,087
  7,679
  8,307
  8,973
  9,677
  10,424
  11,214
  12,051
  12,936
  13,872
  14,863
  15,910
  17,018
  18,189
  19,426
  20,734
  22,115

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
  18,405
  19,342
  20,325
  21,356
  22,437
  23,573
  24,764
  26,014
  27,326
  28,702
  30,148
  31,664
  33,257
  34,928
  36,682
  38,524
  40,457
  42,487
  44,618
  46,854
  49,203
  51,668
  54,257
  56,975
  59,828
  62,824
  65,969
  69,271
  72,738
  76,379
Adjusted assets (=assets-cash), $m
  17,518
  18,405
  19,342
  20,325
  21,356
  22,437
  23,573
  24,764
  26,014
  27,326
  28,702
  30,148
  31,664
  33,257
  34,928
  36,682
  38,524
  40,457
  42,487
  44,618
  46,854
  49,203
  51,668
  54,257
  56,975
  59,828
  62,824
  65,969
  69,271
  72,738
  76,379
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
  4,820
  5,065
  5,322
  5,592
  5,875
  6,173
  6,485
  6,812
  7,156
  7,516
  7,895
  8,292
  8,709
  9,146
  9,606
  10,088
  10,594
  11,126
  11,684
  12,269
  12,884
  13,530
  14,208
  14,919
  15,667
  16,451
  17,275
  18,139
  19,047
  20,001
Working capital, $m
  1,284
  232
  244
  257
  270
  283
  298
  313
  329
  345
  363
  381
  400
  420
  441
  463
  487
  511
  537
  564
  592
  621
  653
  685
  720
  756
  793
  833
  875
  919
  965
Total debt, $m
  9,112
  9,651
  10,396
  11,177
  11,997
  12,857
  13,759
  14,706
  15,700
  16,743
  17,837
  18,986
  20,192
  21,458
  22,787
  24,181
  25,645
  27,182
  28,796
  30,490
  32,268
  34,135
  36,095
  38,153
  40,314
  42,582
  44,964
  47,464
  50,089
  52,846
  55,740
Total liabilities, $m
  14,093
  14,632
  15,377
  16,158
  16,978
  17,838
  18,740
  19,687
  20,681
  21,724
  22,818
  23,967
  25,173
  26,439
  27,768
  29,162
  30,626
  32,163
  33,777
  35,471
  37,249
  39,116
  41,076
  43,134
  45,295
  47,563
  49,945
  52,445
  55,070
  57,827
  60,721
Total equity, $m
  4,648
  3,773
  3,965
  4,167
  4,378
  4,600
  4,832
  5,077
  5,333
  5,602
  5,884
  6,180
  6,491
  6,818
  7,160
  7,520
  7,897
  8,294
  8,710
  9,147
  9,605
  10,087
  10,592
  11,123
  11,680
  12,265
  12,879
  13,524
  14,201
  14,911
  15,658
Total liabilities and equity, $m
  18,741
  18,405
  19,342
  20,325
  21,356
  22,438
  23,572
  24,764
  26,014
  27,326
  28,702
  30,147
  31,664
  33,257
  34,928
  36,682
  38,523
  40,457
  42,487
  44,618
  46,854
  49,203
  51,668
  54,257
  56,975
  59,828
  62,824
  65,969
  69,271
  72,738
  76,379
Debt-to-equity ratio
  1.960
  2.560
  2.620
  2.680
  2.740
  2.800
  2.850
  2.900
  2.940
  2.990
  3.030
  3.070
  3.110
  3.150
  3.180
  3.220
  3.250
  3.280
  3.310
  3.330
  3.360
  3.380
  3.410
  3.430
  3.450
  3.470
  3.490
  3.510
  3.530
  3.540
  3.560
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
  1,200
  1,470
  1,757
  2,063
  2,389
  2,735
  3,102
  3,493
  3,909
  4,350
  5,504
  6,001
  6,528
  7,087
  7,679
  8,307
  8,973
  9,677
  10,424
  11,214
  12,051
  12,936
  13,872
  14,863
  15,910
  17,018
  18,189
  19,426
  20,734
  22,115
Depreciation, amort., depletion, $m
  720
  1,189
  1,202
  1,215
  1,229
  1,244
  1,259
  1,275
  1,292
  1,310
  1,328
  407
  427
  449
  471
  495
  520
  546
  573
  602
  632
  664
  697
  732
  769
  808
  848
  890
  935
  982
  1,031
Funds from operations, $m
  2,165
  2,389
  2,672
  2,972
  3,292
  3,632
  3,993
  4,377
  4,785
  5,218
  5,678
  5,911
  6,428
  6,977
  7,558
  8,174
  8,827
  9,519
  10,251
  11,026
  11,847
  12,715
  13,633
  14,605
  15,632
  16,718
  17,866
  19,079
  20,361
  21,715
  23,146
Change in working capital, $m
  202
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
Cash from operations, $m
  1,963
  2,492
  2,660
  2,960
  3,279
  3,618
  3,979
  4,362
  4,769
  5,202
  5,660
  5,893
  6,409
  6,957
  7,537
  8,152
  8,804
  9,494
  10,225
  10,999
  11,818
  12,685
  13,602
  14,572
  15,598
  16,682
  17,828
  19,039
  20,319
  21,672
  23,100
Maintenance CAPEX, $m
  0
  -237
  -248
  -261
  -274
  -288
  -303
  -318
  -334
  -351
  -369
  -387
  -407
  -427
  -449
  -471
  -495
  -520
  -546
  -573
  -602
  -632
  -664
  -697
  -732
  -769
  -808
  -848
  -890
  -935
  -982
New CAPEX, $m
  -829
  -230
  -245
  -257
  -270
  -283
  -297
  -312
  -327
  -344
  -361
  -378
  -397
  -417
  -438
  -459
  -482
  -506
  -531
  -558
  -586
  -615
  -646
  -678
  -712
  -747
  -784
  -824
  -865
  -908
  -953
Cash from investing activities, $m
  -1,202
  -467
  -493
  -518
  -544
  -571
  -600
  -630
  -661
  -695
  -730
  -765
  -804
  -844
  -887
  -930
  -977
  -1,026
  -1,077
  -1,131
  -1,188
  -1,247
  -1,310
  -1,375
  -1,444
  -1,516
  -1,592
  -1,672
  -1,755
  -1,843
  -1,935
Free cash flow, $m
  761
  2,025
  2,166
  2,441
  2,735
  3,047
  3,379
  3,732
  4,108
  4,507
  4,931
  5,127
  5,605
  6,112
  6,651
  7,221
  7,827
  8,468
  9,148
  9,868
  10,630
  11,438
  12,292
  13,197
  14,154
  15,166
  16,236
  17,368
  18,564
  19,829
  21,165
Issuance/(repayment) of debt, $m
  -124
  704
  745
  781
  820
  860
  902
  947
  994
  1,043
  1,095
  1,149
  1,206
  1,266
  1,329
  1,395
  1,464
  1,537
  1,614
  1,694
  1,778
  1,867
  1,960
  2,058
  2,161
  2,268
  2,382
  2,500
  2,625
  2,756
  2,894
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
  704
  745
  781
  820
  860
  902
  947
  994
  1,043
  1,095
  1,149
  1,206
  1,266
  1,329
  1,395
  1,464
  1,537
  1,614
  1,694
  1,778
  1,867
  1,960
  2,058
  2,161
  2,268
  2,382
  2,500
  2,625
  2,756
  2,894
Total cash flow (excl. dividends), $m
  -586
  2,729
  2,911
  3,223
  3,554
  3,907
  4,281
  4,679
  5,102
  5,550
  6,025
  6,276
  6,811
  7,378
  7,979
  8,616
  9,291
  10,005
  10,761
  11,562
  12,409
  13,305
  14,252
  15,254
  16,314
  17,434
  18,618
  19,868
  21,190
  22,585
  24,059
Retained Cash Flow (-), $m
  223
  -183
  -192
  -201
  -211
  -222
  -233
  -244
  -256
  -269
  -282
  -296
  -311
  -326
  -343
  -360
  -378
  -396
  -416
  -437
  -459
  -481
  -505
  -531
  -557
  -585
  -614
  -645
  -677
  -711
  -746
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
 
  3,604
  2,719
  3,021
  3,343
  3,685
  4,049
  4,435
  4,845
  5,281
  5,743
  5,980
  6,500
  7,052
  7,637
  8,256
  8,913
  9,609
  10,345
  11,125
  11,950
  12,823
  13,747
  14,724
  15,757
  16,849
  18,004
  19,224
  20,513
  21,874
  23,313
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
 
  3,325
  2,296
  2,316
  2,306
  2,266
  2,198
  2,102
  1,982
  1,843
  1,687
  1,459
  1,298
  1,135
  975
  821
  679
  549
  435
  337
  254
  187
  135
  94
  64
  42
  27
  17
  10
  6
  3
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 15.2
Price to Sales 0.9
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 6.8
Price to Free Cash Flow 11.8
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 5.1% 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 193.026 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 $13.3 billion.


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COMPANY NEWS

▶ 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]
▶ What are Colorado's most valuable brands?   [09:10AM  at bizjournals.com]
▶ Honor World Kidney Day with DaVita   [06:00AM  PR Newswire]
▶ The Biggest Loser: Envision Healthcare Tumbles 6.3%   [Mar-01-17 04:41PM  at Barrons.com]
▶ The Everett Clinic to Acquire Totem Lake Family Medicine   [Feb-28-17 04:37PM  PR Newswire]
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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