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Are Investors Undervaluing Fresenius (FMS) Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Fresenius (FMS - Free Report) . FMS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13.62. This compares to its industry's average Forward P/E of 35.58. Over the last 12 months, FMS's Forward P/E has been as high as 18.14 and as low as 10.57, with a median of 14.85.

FMS is also sporting a PEG ratio of 1.73. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FMS's PEG compares to its industry's average PEG of 2.97. Over the last 12 months, FMS's PEG has been as high as 3.69 and as low as 1.71, with a median of 2.23.

Another notable valuation metric for FMS is its P/B ratio of 1.65. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. FMS's current P/B looks attractive when compared to its industry's average P/B of 4.08. Over the past year, FMS's P/B has been as high as 1.86 and as low as 1.18, with a median of 1.65.

Finally, we should also recognize that FMS has a P/CF ratio of 7.18. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 24.60. FMS's P/CF has been as high as 8.30 and as low as 5.59, with a median of 7.42, all within the past year.

These are only a few of the key metrics included in Fresenius's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, FMS looks like an impressive value stock at the moment.

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