The company reported better-than-expected earnings results for the third quarter in early November, which sent the shares sharply higher for the month.
DaVita hasn't grown much, which has weighed on the share price in recent years. But the latest results provided some relief for investors who are looking for more growth.
The kidney dialysis treatment provider generated revenue of $2.9 billion last quarter, a year-over-year increase of 2%. Adjusted earnings per share came in at $1.53, soundly beating analysts' estimates of $1.24.
Management raised its outlook through 2020, which is encouraging given the increased regulatory scrutiny of the industry. Adjusted operating income is expected to be $1.74 billion to $1.77 billion in 2019. DaVita also raised its guidance for operating cash flow to a range of $1.525 billion to $1.675 billion.
As for 2020, adjusted earnings per share are expected to be $5.25 to $5.75, which includes costs related to ballot initiatives in California, which management believes would increase costs for patient care. At a current trading price of $72 per share, DaVita stock currently has a forward price-to-earnings ratio of 13 times next year's earnings estimates.