Using an unlevered Free Cash Flow to Firm (FCFF) model, we project DaVita Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 2.5% to 4.1% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 76, DPO 22, DIO 6). At a 5.8% WACC with mid-year discounting, the terminal value (79% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $347.51 per share, suggesting DVA is undervalued by 121.3% at the current price of $157.03.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,159 | 2,222 | 2,285 | 2,453 | 2,553 | 2,617 |
| (−) Net Interest | 462 | 475 | 489 | 525 | 546 | 560 |
| (+) D&A | 589 | 595 | 612 | 640 | 681 | 698 |
| EBITDA | 3,210 | 3,292 | 3,386 | 3,618 | 3,781 | 3,876 |
| (−) Tax | 429 | 442 | 454 | 488 | 508 | — |
| (−) CapEx | 670 | 690 | 709 | 761 | 793 | — |
| (−) ΔWC | 63 | 72 | 73 | 193 | 116 | — |
| Free Cash Flow (FCF) | 2,048 | 2,088 | 2,149 | 2,176 | 2,365 | — |
| Peers' EBITDA Multiple | 12.1x | |||||
| Terminal Value | 47,049 | |||||
| WACC / Discount Rate | 5.79% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,991 | 1,919 | 1,867 | 1,787 | 1,836 | 35,511 |
| Enterprise Value | 44,911 | |||||
| Projection Period | 9,400 | 20.9% | ||||
| Terminal Value | 35,511 | 79.1% | ||||
| (−) Current Net Debt | 14,292 | |||||
| Equity Value | 30,619 | |||||
| (÷) Outstanding Shares | 88M | |||||
| Fair Price | $348 | +121.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.1x | 10.1x | 12.1x | 14.1x | 16.1x |
|---|---|---|---|---|---|
| 3.8% | $247 | $320 | $393 | $466 | $539 |
| 4.8% | $230 | $300 | $370 | $439 | $509 |
| 5.8% | $215 | $281 | $348 | $414 | $480 |
| 6.8% | $200 | $263 | $327 | $390 | $453 |
| 7.8% | $186 | $246 | $307 | $367 | $428 |
Current price: $157.03. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.