Trade-Ideas: DaVita HealthCare Partners (DVA) Is Today's

Trade-Ideas LLC identified DaVita HealthCare Partners ( DVA) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified DaVita HealthCare Partners as such a stock due to the following factors:

  • DVA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.7 million.
  • DVA has traded 1.7 million shares today.
  • DVA is trading at 7.87 times the normal volume for the stock at this time of day.
  • DVA crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on DVA:

DaVita HealthCare Partners Inc. provides kidney dialysis services for patients suffering from chronic kidney failure or end stage renal disease (ESRD). It operates through two divisions, Kidney Care and HealthCare Partners. DVA has a PE ratio of 34. Currently there are 5 analysts that rate DaVita HealthCare Partners a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for DaVita HealthCare Partners has been 996,500 shares per day over the past 30 days. DaVita HealthCare has a market cap of $15.9 billion and is part of the health care sector and health services industry. The stock has a beta of 0.88 and a short float of 1.6% with 2.68 days to cover. Shares are up 11.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates DaVita HealthCare Partners as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, growth in earnings per share, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 188.1% when compared to the same quarter one year prior, rising from -$110.62 million to $97.43 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.3%. Since the same quarter one year prior, revenues slightly increased by 8.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DAVITA HEALTHCARE PARTNERS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DAVITA HEALTHCARE PARTNERS reported lower earnings of $1.23 versus $3.34 in the prior year. This year, the market expects an improvement in earnings ($3.96 versus $1.23).
  • Net operating cash flow has slightly increased to $429.00 million or 4.61% when compared to the same quarter last year. Despite an increase in cash flow, DAVITA HEALTHCARE PARTNERS's cash flow growth rate is still lower than the industry average growth rate of 39.99%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Health Care Providers & Services industry and the overall market, DAVITA HEALTHCARE PARTNERS's return on equity is below that of both the industry average and the S&P 500.

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