Yahoo Finance Is Now The Time To Look At Buying Fresenius Medical Care AG (ETR:FME)?
Today we're going to take a look at the well-established Fresenius Medical Care AG (ETR:FME). The company's stock received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €42.06 at one point, and dropping to the lows of €34.66. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Fresenius Medical Care's current trading price of €36.22 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Fresenius Medical Care’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Fresenius Medical Care
Is Fresenius Medical Care Still Cheap?
According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Fresenius Medical Care’s ratio of 21.98x is trading slightly below its industry peers’ ratio of 22.06x, which means if you buy Fresenius Medical Care today, you’d be paying a decent price for it. And if you believe that Fresenius Medical Care should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, Fresenius Medical Care’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What kind of growth will Fresenius Medical Care generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Fresenius Medical Care's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in FME’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at FME? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?
Are you a potential investor? If you’ve been keeping tabs on FME, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for FME, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing Fresenius Medical Care at this point in time. You'd be interested to know, that we found 2 warning signs for Fresenius Medical Care and you'll want to know about them.
If you are no longer interested in Fresenius Medical Care, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
