Last update on 2024-06-07

DaVita (DVA) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Detailed Piotroski F-Score Analysis for DaVita (DVA) 2023. Score: 8/9. Comprehensive review of profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 8

We're running DaVita (DVA) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a measurement of a company's financial strength, scored out of 9. DaVita (DVA) scored 8 out of 9, showing strong performance. Here's the analysis: - **Profitability**: DaVita had a positive net income of $691.5 million in 2023 and historical positive net incomes. Cash flow from operations is also strong, and ROA has improved, although it is still below the industry median. - **Liquidity**: DaVita's leverage ratio improved, suggesting better financial stability. However, the current ratio slightly declined, indicating a minor dip in liquidity. - **Operations**: The company reduced its number of outstanding shares, has shown an improved gross margin, and enhanced its asset turnover ratio. Overall, DaVita's financial health looks strong based on these indicators.

Insights for Value Investors Seeking Stable Income

Given DaVita’s strong Piotroski F-Score of 8, there's a robust indication of the company’s financial health and operational efficiency. Despite some areas for improvement like ROA and the current ratio, DaVita shows potential as an investment. Investors might find value in DaVita, especially if they can tolerate minor liquidity concerns and a lower-than-average industry ROA. Further analysis and comparison with industry peers are recommended to make a more informed decision.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of DaVita (DVA)

Company has a positive net income?

Net income indicates the profitability of a company after all expenses have been deducted from total revenue. It is crucial for assessing financial health.

For the year ending 2023, DaVita (DVA) reported a net income of $691,535,000. This positive net income not only secures 1 point based on Piotroski's criteria but also signals profitability for the period. Historically, DaVita has generally posted positive net income figures over the last 20 years, except for fluctuating lower figures in 2015 and 2018. Notably, DaVita experienced a dip in net income in 2022 at $560.4 million but rebounded effectively in 2023. This upward trend is positive and important for long-term investors.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a measure of the cash generated by a company's normal business operations. Positive CFO indicates healthy cash generation, essential for sustaining operations, paying dividends, and debt.

DaVita (DVA) boasts a CFO of $2,059,031,000 in 2023, marking a positive cash flow from operations. Analyzing the trend data over the last 20 years, this figure is among the highest in its history, growing markedly from $293.65 million in 2003. This persistence in positive CFO reflects robust operational health and persistent capability to generate cash through its core business activities, positively contributing to the Piotroski score.

Return on Assets (ROA) are growing?

The change in ROA (Return on Assets) measures the company's ability to generate profit from its assets over time. It's a critical measure of efficiency and profitability.

DaVita's ROA increased from 0.0329 in 2022 to 0.0409 in 2023, reflecting increased profitability and asset efficiency. This is a positive trend and scores 1 point in the Piotroski Analysis. However, it's important to observe that DaVita's ROA remains significantly lower than the industry median ROA, which was 0.3298 in 2023. Since 2003, DaVita’s ROA has lagged behind the industry median consistently, suggesting a persistent inefficiency compared to its peers. Nevertheless, the recent improvement in ROA indicates internal positive changes.

Operating Cashflow are higher than Netincome?

This criterion checks if a company's Operating Cash Flow is greater than its Net Income. This is important as it suggests that the company is generating sufficient cash flow from its operations to cover its net earnings, indicating good financial health.

For DaVita (DVA) in 2023, the Operating Cash Flow is $2,059,031,000, while its Net Income is $691,535,000. Since the Operating Cash Flow is higher, DaVita earns 1 point for this criterion, indicating strong operational cash flow relative to net income. Historically, comparing trends from 2003 to 2023, DaVita shows fluctuating, but generally increasing, operating cash flows and net income with few exceptions. Particularly notable is the significant increase in operating cash flow from 2022 to 2023 demonstrating robust and improving cash generation capability.

Liquidity of DaVita (DVA)

Leverage is declining?

Change in leverage refers to the comparison of a company’s debt level relative to its equity. This metric is crucial as it highlights how much of the business is financed by debt versus wholly-owned funds, indicating financial stability and potential risk exposure.

In 2022, DaVita (DVA) had a leverage ratio of 0.6614, which decreased to 0.6274 in 2023, signaling an improvement in its financial leverage. Traditionally, lower leverage ratios suggest better financial stability, as the company is less reliant on debt to finance its operations. Given this decline in leverage, DaVita earns a commendable score of 1 point according to the Piotroski F-Score metric for reduced leverage. Analyzing the additional data over the past two decades, DaVita’s leverage has fluctuated, with peaks in fiscal stress years but maintains a downward trajectory in 2023. For instance, in 2019 leverage was buoyed disproportionately at 0.6182 but saw correcting trends subsequently, indicating endeavors to optimize their capital structure.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term liabilities with its short-term assets. A higher ratio indicates better liquidity.

Between 2022 and 2023, DaVita's Current Ratio decreased from 1.2044 to 1.1876. This decline in the Current Ratio suggests a worsening liquidity position. It's important to note that DaVita's Current Ratio has generally been above the industry median over the last 20 years, often oscillating and showing varied fiscal health. In 2023, it stands slightly below the industry median of 1.2826. Thus, no point should be added for this criterion.

Number of shares not diluted?

Change in shares outstanding is crucial as it indicates the company's activities in the market, particularly in terms of stock buybacks or new stock issuance. Decreasing shares outstanding generally signals confidence in the company's financial health.

In the case of DaVita (DVA), the number of outstanding shares has decreased from 92,992,000 in 2022 to 90,790,000 in 2023. This trend signals a positive criteria and adds 1 point. Over the past 20 years, DaVita has consistently reduced its outstanding shares, from a high of 227,520,000 in 2003 to the current 90,790,000, underscoring strong management actions to repurchase shares, which can be a good sign for investors.

Operating of DaVita (DVA)

Cross Margin is growing?

Gross margin is a company's total sales revenue minus its cost of goods sold, divided by the total sales revenue. An increase in gross margin indicates improved efficiency.

In 2023, DaVita (DVA) reported a gross margin of 0.3147, an increase from 0.2929 in 2022. This improvement is substantial as it suggests better cost management and potentially higher profitability. Over the last 20 years, the trend of gross margin for DaVita has shown fluctuations, but the shift from 2022 to 2023 is noteworthy. In comparison to the industry median for 2023, which stands at 0.3298, DaVita is slightly below the average, but the upward trend is a positive sign. The consistently improving gross margin since its dip in 2016 to 0.2779 demonstrates resilience and adaptability, making this trend good for DaVita.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate revenue. It is crucial for understanding how well a company's assets are being leveraged.

The Asset Turnover for DaVita (DVA) has improved from 0.6819 in 2022 to 0.7179 in 2023. This increase reflects enhanced efficiency in utilizing assets to generate revenue, a positive indicator for the company's operational performance. Historically, DaVita's Asset Turnover shows variability but has notably improved from a low of 0.5772 in 2017. An increase in Asset Turnover generally suggests better management efficiency, implying DaVita is maximizing its asset utility, thus earning 1 point in this criterion.