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DaVita’s (DVA) Green Initiatives Win a Coveted Golden Reward

Zacks

DaVita Inc. DVA subsidiary — DaVita Medical Group — recently announced the receipt of the Leadership in Energy & Environmental Design (LEED) Gold certification by the U.S. Green Building Council (USGBC). The award has been conferred on DaVita’s CA-based facility, also known as Casa PacifiCA building.

Notably, the LEED Gold certification is exclusively granted to buildings situated in sustainable sites with strong water, energy, atmosphere, materials and resource efficiencies. Additionally, these buildings should operate under a superior indoor environment and must show innovation in design and regional priority credits. Undoubtedly, DaVita’s Casa PacifiCA building is a solid choice based on the aforementioned criteria.

In an initiative to bolster DaVita’s 2020 environmental goals, the company’s operations are conducted in a healthy environment and DaVita is solely committed to improve health care in the United States without violating the basic environmental norms. In this regard, 75% of Casa PacifiCA’s construction waste was diverted from landfills.

Shares Lack Luster


DaVita has had an unfavorable run on the bourse in the last six months. The stock has lost almost 13.4%, much wider than the broader industry’s decline of just 4.5%. The current level also substantially underperforms the S&P 500’s gain of roughly 4.8%. This deterioration is largely due to the ongoing political conundrum in the U.S. medical world that had initiated since the Presidential elections. High debt levels, adverse effects of healthcare reforms and escalating expenses are other major stock dampeners.

Favorable Estimate Revision Trend

The estimate revision trend has been favorable for the company. In the current quarter, two estimates moved north compared with two movements in the opposite direction over the last two months. As a result, the Zacks Consensus Estimate for the ongoing quarter has inched up 1.1% to 94 cents per share during the same time frame. DaVita carries a Zacks Rank #3 (Hold).

For the full year, six estimates moved upward compared with two downward movements. As a result, the Zacks Consensus Estimate for the full year has increased 1.4% to $3.54 per share over the same period.

Our Take

DaVita’s environment-friendly operations are likely to enhance the company’s sustainable growth in the long haul. In fact, DaVita’s Denver-based headquarters were awarded with the LEED Platinum Certification by the USGBC for operations and maintenance efficiencies only last year.

Davita’s significant growth in recent times was reflected on the back of strong patient services. Last quarter the company saw solid improvement in Kidney care. DaVita also made crucial efforts to control expenses. The company’s strength basically lies in enhanced service offerings. A compelling inorganic growth story supported by a strong financial position is the key development catalyst at the moment.

Key Picks

A few better-ranked stocks in the broader medical sector are Edwards Lifesciences Corp. EW, IDEXX Laboratories, Inc. IDXX and Cogentix Medical, Inc. CGNT.

Notably, Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while IDEXX Laboratories and Cogentix Medical have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences delivered an average earnings beat of 10.8% over the trailing four quarters. The company has a long-term expected earnings growth rate of 15.2%.

IDEXX Laboratories delivered an average earnings beat of 9.3% over the trailing four quarters. It has a long-term expected earnings growth rate of 19.8%.

Cogentix Medical came up with a positive earnings surprise of 200% in the last quarter. The stock represented a stellar return of 100.9% over the last year.

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