Should Value Investors Buy Fresenius (FMS) Stock?

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.

Fresenius (FMS) is a stock many investors are watching right now. FMS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 14.72, which compares to its industry's average of 39.11. FMS's Forward P/E has been as high as 18.14 and as low as 10.57, with a median of 14.34, all within the past year.

FMS is also sporting a PEG ratio of 1.92. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FMS's industry currently sports an average PEG of 3.27. Over the past 52 weeks, FMS's PEG has been as high as 3.69 and as low as 1.92, with a median of 2.36.

Another notable valuation metric for FMS is its P/B ratio of 1.71. The P/B is a method of comparing a stock's market value to 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 12 months, FMS's P/B has been as high as 1.89 and as low as 1.18, with a median of 1.53.

Finally, our model also underscores that FMS has a P/CF ratio of 7.51. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. FMS's current P/CF looks attractive when compared to its industry's average P/CF of 24.60. Over the past year, FMS's P/CF has been as high as 8.30 and as low as 5.59, with a median of 7.50.

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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Fresenius Medical Care AG Co. KGaA (FMS) : Free Stock Analysis Report
 
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