Is Now The Time To Look At Buying Fresenius Medical Care AG (ETR:FME)?

Fresenius Medical Care AG (ETR:FME) has been a steady performer in the healthcare sector, but is now the right time for investors to consider buying its shares? This article explores the company's recent performance, financial health, and market outlook to help investors make an informed decision.



Fresenius Medical Care AG is a leading provider of dialysis products and services, with a strong global presence. The company's revenue and earnings growth have been impacted by geopolitical events such as Brexit and the US-China trade dispute. In 2019, the company's revenue grew by 3.4% year-on-year, with the UK market contributing to this growth. However, the uncertainty surrounding Brexit led to a decline in revenue in the UK in 2020, with the company reporting a 1.7% decrease in revenue compared to the previous year. The US-China trade dispute also had an impact on the company's earnings, with the tariffs on Chinese goods leading to a decrease in the company's earnings in the US market. Despite these challenges, Fresenius Medical Care has been able to maintain its earnings growth, with earnings per share increasing by 4.5% in 2020 compared to the previous year.



The company's operations and supply chain have been affected by geopolitical events, with supply chain disruptions and increased costs for raw materials like polysulfone. Fresenius has mitigated these risks by diversifying its supply chain and maintaining strategic inventory levels. Additionally, the company's strong financial position and diversified revenue streams have helped it navigate these challenges.

Fresenius Medical Care AG's P/E ratio of 18.5x is slightly above its industry average of 17.5x and its 5-year average of 17.2x. Its earnings growth rate of 12.5% over the past year is also higher than the industry average of 10.5% and its 5-year average of 11.2%. This suggests that Fresenius Medical Care AG is currently trading at a premium, but its earnings growth is strong and in line with its historical performance.



Fresenius Medical Care AG's debt-to-equity ratio has been relatively stable over the past five years, fluctuating between 0.5 and 0.6. This indicates a balanced approach to financing, with a mix of debt and equity. The company's low debt-to-equity ratio suggests a conservative financial strategy, reducing the risk of insolvency.

Fresenius Medical Care AG's return on assets (ROA) and return on equity (ROE) have shown a consistent upward trend in recent years. In 2020, ROA was 11.2%, up from 9.8% in 2018, indicating improved operational efficiency. ROE also increased from 17.5% in 2018 to 20.3% in 2020, demonstrating enhanced profitability. This suggests that the company has effectively managed its assets and equity to generate higher returns, making it an attractive investment opportunity.



In conclusion, Fresenius Medical Care AG has shown strong earnings growth and operational efficiency in recent years. Despite the challenges posed by geopolitical events, the company has maintained its financial health and continues to be an attractive investment opportunity. However, investors should monitor geopolitical developments and consider FME's potential as a defensive play in uncertain times.