Analysis of FMC 2015

Company: FMC

ISIN DE0005785802 | WKN 578580

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: Present in 40 countries world wide and are running 3,361 dialysis clinics.

P/E: 22.7

Here you can find the previous analysis of Fresenius Medical Care (FMC) 2015. 

The P/E of FMC is far, far too high with 22.7 but the P/B is still semi ok with 2.5. Graham still gives a no go on this one. the earnings to sales are good with 7% but the ROE is mediocre with only 11%. The book to debt ratio is also a bit on the low-side with 0.6.
In the last five years they have shown an excellent yearly revenue growth of 5.6%! This then gives us a motivated P/E of 16 to 20 which means that FMC is fairly to a little bit overvalued by the market today.
The spend around 12% on research which I find to be a bit on the low side and I would not mind to see improvements there.
They pay a puny dividend of 1.3% which happily corresponds to only 28% of their earnings so with remained earnings they should be able to keep the dividend payments also in the future.

Conclusion: This time both Graham and I say no to FMC. The share price have simply run overboard which have lead to too strained P/E, P/B and dividend values for being of any interest as a value investor. I still believe in this company and I would love to own it but right now I will keep my fingers away from this cookie jar.

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