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What's in the Cards for DaVita (DVA) This Earnings Season?

Zacks Equity Research
·3-min read

DaVita Inc. DVA is expected to release fourth-quarter 2019 results shortly this month.

In the last reported quarter, the company delivered a positive earnings surprise of 24.4%. It has an average positive surprise of 8.1% for the trailing four quarters.

Let’s take a look at how things are shaping up prior to this announcement.

What do the Q4 Estimates Say?

For the fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $2.92 billion, indicating a rise of 3.4% from the year-ago quarter. The same for the earnings per share (EPS) is pinned at $1.66, suggesting 84.4% growth from the year-ago reported figure.

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Factors at Play

As an operating division of DaVita, DaVita Kidney Care focuses on setting global standards for clinical, social and operational practices in kidney care. A possible increase in net dialysis and related lab patient service revenues are likely to have contributed to the company’s top line in the soon-to-be-reported quarter.

The company also expects significant gain from calcimimetics for the quarter, which is likely to have driven adjusted operating income results. In fact, management expects to have generated approximately $220 million in profit from calcimimetics in 2019.

DaVita Inc. Price and EPS Surprise

 

DaVita Inc. Price and EPS Surprise
DaVita Inc. Price and EPS Surprise

DaVita Inc. price-eps-surprise | DaVita Inc. Quote

Reflective of these, DaVita raised its guidance for 2019.

Notably, the company now expects adjusted operating income between $1.74 billion and $1.77 billion compared with the previous guidance of $1.64-$1.70 billion.

Adjusted EPS is estimated in the range of $5.25-$5.75, higher than the previous expectation of $5-$5.50.

However, DaVita has borne significant costs regarding the Proposition 8. This might have impacted margins in the fourth quarter.

What Our Quantitative Model Suggests

Per our proven model, a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see.

Earnings ESP: DaVita has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this time around.

DexCom DXCM has an Earnings ESP of +12.27% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Change Healthcare CHNG has an Earnings ESP of +1.83% and a Zacks Rank #1.

Glaukos GKOS has an Earnings ESP of +17.65% and a Zacks Rank #3.

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Glaukos Corporation (GKOS) : Free Stock Analysis Report
 
DexCom, Inc. (DXCM) : Free Stock Analysis Report
 
DaVita Inc. (DVA) : Free Stock Analysis Report
 
Change Healthcare Inc. (CHNG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research