Fresenius SE & Co. KGaA – Value Analysis (XETRA:FRE) : October 6, 2017

Capitalcube gives Fresenius SE & Co. KGaA a score of 47.

Our analysis is based on comparing Fresenius SE & Co. KGaA with the following peers – Coloplast A/S Class B, Option NV, OHB AG and mut AG (COLO.B-DK, OINA-DE, OHB-DE and M7U-DE).

Investment Outlook

Fresenius SE & Co. KGaA has a fundamental score of 47 and has a relative valuation of UNDERVALUED.

Fundamental Score

Access our research and ratings on Fresenius SE & Co. KGaA

Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It trades at a lower Price/Book multiple (1.86) than its peer median (4.20).
  • The market expects FRE-DE‘s earnings to grow at about the same rate as its chosen peers and also does not seem to expect much improvement in its below peer median returns.
  • FRE-DE employs relatively high amounts of assets while generating relatively median profit margins.
  • Changes in annual revenues are in line with its chosen peers but lags in terms of earnings suggesting that the company is less cost conscious and may be spending for growth.
  • FRE-DE‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While FRE-DE‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s capital investment program and to-date returns suggest that the company is likely making big bets on the future.
  • FRE-DE has additional debt capacity.

Access our research and ratings on Fresenius SE & Co. KGaA

Leverage & Liquidity

FRE-DE has additional debt capacity.

  • With debt at a reasonable 29.25% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 28.47%), and a well-cushioned interest coverage level of 7.47x, FRE-DE has the capacity to borrow some more.
  • All 4 peers for the company have an outstanding debt balance.

FRE-DE has maintained its relatively high liquidity profile from the recent year-end.

  • FRE-DE‘s interest coverage is its highest relative to the last five years and compares to a low of 4.05x in 2012.
  • The increase in its interest coverage to 7.47x from 6.26x (in 2016) was also accompanied by an increase in its peer median during this period to 7.47x from 6.82x.
  • Interest coverage rose 0.56 points relative to peers.
  • FRE-DE‘s debt-EV has increased 5.42 percentage points from last year’s low but is still below its five-year average debt-EV of 30.93.
  • Like the interest coverage trend, the increase in its debt-EV (to 29.25% from 23.84%) was also accompanied by an increase in its peer median during this period (to 28.47% from 23.84%).
  • Relative to peers, debt-EV rose 0.78 percentage points.

Access the detailed analysis for Fresenius SE & Co. KGaA

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Coloplast A/S Class B 2.18 0.95 103.96 140.95
Option NV 32.08 0.17 -2 -19.7
OHB AG 28.47 1.45 5.78 29.01
mut AG 7.2 11.91 27.23 149.67
Fresenius SE & Co. KGaA 29.25 1.23 7.47 21.35
Peer Median 28.47 1.23 7.47 29.01
Best In Class 2.18 11.91 103.96 149.67

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Company Profile

Fresenius SE & Co. KGaA is a global healthcare group, which engages in the provision of products, and services for dialysis, hospitals, and outpatient medical care. It operates through the following business segments: Fresenius Medical Care, Fresenius Kabi, Fresenius Helios, Fresenius Vamed, and Corporate & Other. The Fresenius Medical Care segment is comprised of dialysis products, and healthcare services. The Fresenius Kabi segment provides intravenous drugs, clinical nutrition, infusion therapy, medical devices, and transfusion technology. The Fresenius Helios is the hospital operations. The Fresenius Vamed is consist of projects, and services for hospitals and other healthcare facilities. The Corporate & Other segment engages in the holding activities. The company was founded by Eduard Fresenius in October 1912 and is headquartered in Bad Homburg, Germany.

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