Company: Fresenius
Business: A German health care holding and investment company: They own fully or parts of: Fresenius Medical Care that work with dialysis, Fresenius Kabi treatment of chronically ill patients, Fresenius Helios having 109 hospitals and clinics (in Germany mainly) for acute treatment of patients, Fresenius Vamed helps with projects and management business of health care facilities and finally Fresenius Netcare the IT provider for the group.
Active: Fresenius with daughter companies are active in over 100 countries world wide.
P/E: 19.6
Here you can find the previous analysis of Fresenius.
The P/E is too high for me with 19.6 and the P/B is also high with 2.4 which leaves us with a cold response from Graham. The earnings to sales are at 5% which is find very low for an investment and holding company. The ROE is also not much to jiggle the bells for since it is at 12.3% and the book to debt ratio is low aka bad with 0.4. They have however shown an excellent growth rate in the last six years and are now at 8.7% per year! This gives us a motivated P/E of 22 to 26 which means that Fresenius is today slightly undervalued by the market. They spend around 35% of their earnings on R&D and this I find a reasonable and good value. The dividend they pay is not much since it is only 1.1% and the only good news there is that it only represents 22% of their earnings so they should be able to keep it coming. As a comment they recently finished their annual meeting and it was there decided to make a 3:1 split which should happen pretty soon so do not get chocked if the share price gets adjusted by a third.
Conclusion: Graham is negative and I also find the company not very interesting at the moment. What is however of interest is that the since I made the last analysis the share price has increased by over 20%! So maybe one should start picking companies according to the opposite of what I find in my analysis but the P/E is high, the P/B is high. The ROE is low and the dividend is low. There must simply be better moments to step in as a shareholder in Fresenius.
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