Monday, 2 June 2014

Analysis of Fresenius Medical Care (FMC) 2014

FMC is a German dialysis company

Company: Fresenius Medical Care (FMC)

Business: A German medicinal products and service company that are mainly active within the dialysis field. The equipment is sold to hospitals, clinics as well as private people so that they can perform the dialysis at home on their own. The maintenance of the equipment and the exchange of filters is a growing market year by year.

Active: World wide with sale of equipment and with their dialysis clinics (3,200 in total with no expansion since last year!) they are present in 40 countries.

P/E: 13.5

Here you can find the previous analysis of Fresenius Medical Care (FMC).

contrarian values of P/E, P/B, ROE as well as dividend

The P/E of FMC is acceptable with 13.5 and the P/B is a little bit too high but still ok which means that Graham gives a green light on FMC even though it is just barely. The earnings to sales are ok with 8% but the ROE is down at 12% which I would have liked to see higher. The book to debt ratio is so, so with 0.7. In the last six years they have had a yearly growth rate of 5.5% which is very good and this then gives us a motivated P/E of 15 to 19 which means that FMC today is slightly undervalued by the market. They spend a very tiny amount of money on research since it only correspond to 11% of their earnings. I like to see a higher value here. They pay a low dividend of 2.2% which only represents 20% of their earnings so they have room to keep that coming and increasing.

Conclusion: Graham is still saying yes to FMC and the price of the shares have not moved very much since the last time we analysed FMC. I am still a little sceptic but less than last time which does not come from that FMC is performing better but more due to that I consider the P/B to be slightly less of importance. So the P/E is ok and the ROE is ok, the growth is ok and the dividend is ok. FMC simply appear as a boring average company which means that one should probably go buy and hold strategy on it and keep collecting a nice increasing dividend year by year. Hmmm... I will think about it a little.

If this analysis is outdated then you can request a new one.

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