Is DaVita, Inc. overvalued or undervalued?

As of 12 May 2025, DaVita, Inc. has moved from an expensive to a risky valuation grade, indicating a shift in perception regarding its market position. The company is currently considered undervalued based on its financial metrics. Key ratios include a P/E ratio of 10, an EV to EBITDA of 7.83, and a PEG ratio of 0.75, which suggest that the stock may be trading at a discount relative to its earnings growth potential.
In comparison to peers, DaVita's P/E ratio of 10 is significantly lower than that of Encompass Health Corp. at 20.99 and The Ensign Group, Inc. at 29.84, both categorized as very expensive. Additionally, DaVita's EV to EBITDA of 7.83 is more favorable than Encompass Health's 12.80, reinforcing the notion that DaVita is undervalued in its sector. Despite recent underperformance against the S&P 500, particularly over the past year with a return of -3.56% compared to the index's 10.26%, the company's financial ratios suggest potential for recovery and growth.