- If you are wondering whether DaVita's share price fairly reflects the business today, you are not alone. This article focuses squarely on what you might be paying for relative to what you are getting.
- DaVita's stock closed at US$150.72 most recently, with returns of 1.2% over 30 days, 31.6% year to date, 5.1% over 1 year, 96.3% over 3 years and 37.2% over 5 years. These performance figures may influence how investors think about both upside potential and risk.
- Recent attention on DaVita has centred on its role in the US healthcare system and ongoing scrutiny of dialysis providers, as regulators and payors continue to review costs and patient outcomes. This backdrop helps frame how investors interpret DaVita's share price moves, especially when comparing it to other healthcare names facing similar policy and reimbursement questions.
- On our framework of 6 separate valuation checks, DaVita earns a value score of 5. This sets up a closer look at traditional methods like P/E multiples and discounted cash flow, followed by a final section that walks through an even broader way to think about what the market may be pricing in.
Approach 1: DaVita Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model projects a company’s future cash flows and then discounts them back to today’s value so you can compare that figure with the current share price.
For DaVita, the model used is a 2 Stage Free Cash Flow to Equity approach. The company’s latest twelve month free cash flow is about $1.29b. The projections supplied to the model show free cash flow of $1.24b in 2026, with further yearly figures out to 2035. Analyst inputs are available for the earlier years, and Simply Wall St extrapolates beyond that to complete the 10 year path.
Bringing all of those projected cash flows back to today using a discount rate gives an estimated intrinsic value of about $380.69 per share. Compared with the recent share price of $150.72, this implies a 60.4% discount, which the model interprets as DaVita trading well below its DCF estimate.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests DaVita is undervalued by 60.4%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.
Approach 2: DaVita Price vs Earnings
For a profitable company like DaVita, the P/E ratio is a useful way to think about what you are paying for each dollar of current earnings. Investors usually accept a higher P/E when they expect stronger growth or see lower risk, and a lower P/E when they expect more modest growth or see higher risk.
DaVita currently trades on a P/E of 13.94x, compared with the broader Healthcare industry average of 22.07x and a peer average of 35.35x. Simply Wall St also calculates a Fair Ratio of 24.44x for DaVita. This Fair Ratio is a proprietary view of what DaVita’s P/E might be if the market priced in its earnings growth profile, industry, profit margins, market cap and company specific risks.
Because the Fair Ratio blends these company specific factors, it can be more informative than a simple comparison with peers or the industry, which may differ on growth, risk or size. Setting DaVita’s current P/E of 13.94x against the Fair Ratio of 24.44x suggests the shares are trading below that Fair Ratio based guide.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your DaVita Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way for you to attach your own story about DaVita to the numbers by linking your view of its future revenue, earnings and margins to a financial forecast, a Fair Value estimate and then a clear comparison with today’s price.
On Simply Wall St’s Community page, used by millions of investors, Narratives are easy to set up, update automatically when fresh news or earnings arrive, and help you decide whether DaVita looks attractive or stretched by showing how your Fair Value stacks up against the live market price.
For DaVita, one Narrative might lean closer to the higher end of analyst targets around US$179.66 if you think investments in technology, Integrated Kidney Care and international operations can support stronger margins and earnings. Another might sit nearer the lower end around US$126.00 if you are more cautious about treatment volumes, payer mix and the timing of benefits from new clinical and IT programs. Comparing these Narratives side by side helps you see how different assumptions lead to very different views of what the shares are worth.
For DaVita, however, we will make it really easy for you with previews of two leading DaVita Narratives:
Fair value used in this bullish Narrative: US$151.71 per share
Gap to this fair value from the recent price of US$150.72 is about 0.7% below that Narrative fair value.
Revenue growth assumption used in this Narrative: 3.55% per year
- Analysts in this camp anchor on steady dialysis demand, modest revenue growth and a slight lift in profit margins, paired with ongoing share buybacks that reduce the share count each year.
- The story assumes DaVita’s cost discipline, use of technology and international expansion can support earnings of about US$970.4m by around 2028, with the shares trading on a P/E of roughly 11.3x at that point.
- Risks they highlight include elevated patient mortality, reimbursement that trails cost inflation and softer ancillary revenues, so the view relies on these pressures remaining manageable rather than disappearing.
Fair value used in this bearish Narrative: US$126.00 per share
Gap to this fair value from the recent price of US$150.72 is about 19.6% above that Narrative fair value.
Revenue growth assumption used in this Narrative: 4.76% per year
- The more cautious view expects dialysis revenue to grow but assumes margin pressure, with profit margins moving lower even as DaVita spends heavily on IT, AI tools and broader kidney care programs.
- This Narrative is willing to underwrite earnings of about US$803.0m by roughly 2029 and a P/E of around 11.3x, but it treats Integrated Kidney Care losses, payer mix shifts and reimbursement uncertainty as meaningful headwinds.
- It also flags the risk that large clinical and technology projects take years to show clear financial benefits, which could leave earnings growth and free cash flow under pressure if volumes or patient retention do not improve as hoped.
Taken together, these Narratives give you a concise range of what different groups of analysts think DaVita might be worth, what would need to happen in the business to support those views and how today’s price compares with each storyline.
Curious how numbers become stories that shape markets? Explore Community Narratives
Do you think there's more to the story for DaVita? Head over to our Community to see what others are saying!
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.
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