DCF Studio

    DVA · NYQ · Healthcare

    DaVita Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 326.50

    Market price

    USD 183.86

    Implied upside

    +77.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 326.50+77.6%
    Exit multiple
    USD 245.07+33.3%
    Market price
    USD 183.86

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 14.4bnUSD 15.2bnUSD 16.0bnUSD 16.9bnUSD 17.9bn+5.5%
    EBITUSD 2.0bnUSD 2.1bnUSD 2.2bnUSD 2.3bnUSD 2.4bn+5.5%
    NOPATUSD 1.6bnUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 2.0bn+5.5%
    Add depreciation & amortisationUSD 840.1mUSD 886.6mUSD 935.6mUSD 987.3mUSD 1.0bn+5.5%
    Less capital expenditureUSD -663.4mUSD -700.0mUSD -738.7mUSD -779.6mUSD -822.6m+5.5%
    Less increase in working capitalUSD -33.3mUSD -35.1mUSD -37.1mUSD -39.1mUSD -41.3m+5.5%
    Free cashflow to firmUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 2.0bnUSD 2.1bn+5.5%
    Discount factor0.96760.90590.84820.79410.7435-
    Present valueUSD 1.7bnUSD 1.6bnUSD 1.6bnUSD 1.6bnUSD 1.6bn-1.2%
    Present Value Of The ForecastUSD 8.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.886Reported 0.830, pulled toward 1.0 (Blume)
    Cost of equity9.87%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 11.7bn47.7% of capital
    Total debtUSD 12.9bn52.3% of capital, book value as a proxy
    Tax rate19.6%Effective, capped at statutory
    WACC6.81%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 326.50

    78% of EV

    Forecast FCFF, final year
    USD 2.1bn
    Capex at depreciation, working capital in reinvestment
    USD 2.0bn
    Less reinvestment at g/ROIC (16.6% of NOPAT)
    USD -325.3m
    Capitalised
    USD 1.6bn
    ROIC (reported)
    15.0%
    Terminal value, undiscounted
    USD 38.8bn
    Terminal value, discounted
    USD 28.8bn
    Enterprise value
    USD 36.9bn
    Less net debt
    USD 12.2bn
    Equity value
    USD 24.8bn

    Exit at 8.8x EBITDA

    Value per shareUSD 245.07

    74% of EV

    Terminal value, undiscounted
    USD 30.5bn
    Terminal value, discounted
    USD 22.6bn
    Enterprise value
    USD 30.8bn
    Less net debt
    USD 12.2bn
    Equity value
    USD 18.6bn

    Spread between methods: 28%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.81%527.70608.36723.64902.271216.84
    5.81%372.92413.09465.21535.65636.31
    6.81%276.31298.86326.50361.22406.24
    7.81%210.23223.82239.85259.09282.65
    8.81%162.15170.71180.53191.94205.38

    Outlined: this model. Green text: above today's price of 183.86. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year5.5%-2.4%-8.0pp
    EBIT margin13.6%9.6%-4.1pp
    Discount rate6.8%8.7%+1.9pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.