Healthcare group, provides products and services for dialysis, hospitals, and outpatient medical care worldwide. The company operates through four segments: Fresenius Medical Care, Fresenius Kabi, Fresenius Helios, and Fresenius Vamed.
Current price €36 (19.2.21)
PE: 12 (2020); 8.9e (2023) – low
PCF: 4 (2020); 3.8e (2021) – very low (undervalued?)
ROIC: 6.6 (Q1-3 2020) – quite low
Current Dividend Yield: 2.4% (Historical high with payout ratio of 25%); Dividend Growth last 10 years 13%
Market cap: € 20B
EV: € 36B
Piotroski F-Score: 3
Altman Z Score 1.08 (stress)
- Present value: €56 (mixed scenario); Discount rate 8%; margin of safety 36%.
- Present value: €65 (best case scenario: 5% annual growth next 5 years increasing to 9% year 6-10). Discount rate 8%.
- Present value: €74 (mixed scenario) with discount rate 2% (market rates for Fresenius Corporate bonds are currently below 1%).
Fresenius SE seems undervalued from a financial perspective with most metrics below historical averages.
European Dividend Aristocrat
Safe Dividend (Low payout)
Defensive Industry (Non Cyclical)
Could be spin off entities
Expansion in EM and China
Strong cash flow
Low valuation vs. Peers
High margin of safety for non cyclical business in defensive industry.
Regulator and political
High Debt (had similar periods of higher debt level in the past and managed it well e.G. 2008/09)
Covid (associated costs and fewer higher margin treatments)
Holding FMC business model depending on dialysis and new treatments will be found.
Disclosure: I’m long Fresenius. No investment advice.
Price target analysts:
Berenberg: €55.95 https://m.aktiencheck.de/analysen/Artikel-Berenberg_senkt_Ziel_fuer_Fresenius_SE_auf_55_95_Euro_Buy-12628358
Please find here a less bullish recent analysis from Sven Carlin about Fresenius:
There is a potential that Fresenius is planning/preparing a spin-off of their Kabi business unit which could create additional value. The new Kabi CEO Sen brings some experience in this area and the Fresenius CEO is looking into restructuring the business to create value.
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