Monday, April 7, 2014

The Motley Fool: Can DaVita HealthCare Partners Inc's Run Last?

The two largest hemodialysis service providers, Fresenius Medical Care (NYSE: FMS  ) and DaVita HealthCare Partners (NYSE: DVA  ) , may have a lot in common, but the performance of their shares is not one of them. Over the past year, DaVita has a 10% lead on on Fresenius and that lead only increases at the two-year (roughly 60%), and five-year (nearly 120%) marks.

Though the operating margins have been similar, DaVita has significantly outgrown Fresenius over the past decade and generated more free cash flow as a percentage of revenue. Better still, DaVita's HealthCare Partners business looks like a "right place, right time, right idea" operation that can benefit from a growing focus on basing health care spending on outcomes, not procedures. Considering DaVita's growth potential, the shares may yet be as much as 20% undervalued today.

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Can DaVita HealthCare Partners Inc's Run Last?

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