Fresenius Medical Care's Solid Earnings Understated by Market

Fresenius Medical Care AG reported solid earnings, but investors seemed underwhelmed. Statutory profit was reduced by €236m due to unusual items, but these are likely one-off expenses. Analysts forecast an improvement next year, and earnings per share increased by 24% in the last year. The company's earnings potential might be understated, and it's essential to consider more than just statutory earnings.

Fresenius Medical Care AG (FME) reported its latest earnings, with a notable reduction in statutory profit due to unusual items amounting to €236m. Despite this, the company's earnings per share (EPS) increased by 24% year-over-year. Analysts have forecasted an improvement for the following year, suggesting that the unusual items are likely one-off expenses.

The company's revenue for the second quarter of 2025 was €4.792 billion, which exceeded the Zacks Consensus Estimate by 1.6% [3]. This marks a 1% year-over-year increase and a 5% increase at constant currency (cc). The revenue growth was driven by a 7% organic increase. Fresenius Medical Care AG also reported a gross profit improvement of 4.2% year-over-year, with the gross margin expanding by 90 basis points to 25.4%.

Analysts have revised their 2025 revenue forecasts to €19.5 billion, a slight reduction from their previous estimates of €19.6 billion [1]. They expect statutory earnings per share to increase by 35% to €3.02, up from their previous estimate of €3.18. The consensus price target remains unchanged at €50.65, indicating that analysts do not expect the decline in earnings to significantly impact the company's valuation.

The company's share buyback program, worth up to €1 billion, has been well-received by investors. The first tranche, valued at up to €600 million, is scheduled for completion by April 30, 2026 [2]. This program is part of the company's new capital allocation framework, aimed at supporting its FME Reignite strategy.

Fresenius Medical Care AG's earnings potential might be understated if one focuses solely on statutory earnings. Analysts have highlighted that the company's revenue growth is expected to slow, with a forecast 0.2% annualized growth rate until 2025, compared to the historical 2.5% p.a. growth over the last five years [1]. However, the company's focus on divesting non-core assets and optimizing its portfolio could lead to long-term benefits.

In conclusion, while Fresenius Medical Care AG reported solid earnings, investors remain cautious due to the unusual items and the expected slowdown in revenue growth. The company's share buyback program and focus on core assets could provide long-term benefits, but investors should closely monitor the company's performance and adjust their expectations accordingly.

References:
[1] https://finance.yahoo.com/news/fresenius-medical-care-ag-earnings-042144487.html
[2] https://www.nasdaq.com/articles/fresenius-medical-launches-eur-600-mln-first-tranche-eur-1-bln-share-buyback
[3] https://www.tradingview.com/news/zacks:a3bb9f688094b:0-fms-stock-rises-as-q2-earnings-beat-estimates-revenues-gain-y-y/