Is DaVita, Inc. overvalued or undervalued?

As of 12 May 2025, the valuation grade for DaVita, Inc. has moved from attractive to risky, indicating a shift towards a more negative outlook. The company appears to be overvalued based on its current metrics, particularly with a P/E ratio of 10, an EV to EBITDA ratio of 7.83, and a PEG ratio of 0.75, which suggests that despite a low P/E, the overall valuation does not support a favorable investment case given the risks involved.
In comparison to its peers, DaVita's P/E ratio of 9.71 is significantly lower than Encompass Health Corp. at 20.94 and The Ensign Group, Inc. at 32.46, both of which are rated attractive. Additionally, the company's return performance has lagged behind the S&P 500, with a year-to-date return of -12.92% compared to the index's 12.22%, and a one-year return of -20.18% versus 17.14%. This underperformance reinforces the notion that DaVita, Inc. is currently overvalued in the market.