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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