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Is It Too Late To Consider Buying Fresenius SE & Co. KGaA (ETR:FRE)?

Simply Wall St
·3-min read

Let's talk about the popular Fresenius SE & Co. KGaA (ETR:FRE). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the XTRA. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Fresenius SE KGaA’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Fresenius SE KGaA

Is Fresenius SE KGaA still cheap?

Great news for investors – Fresenius SE KGaA is still trading at a fairly cheap price. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 14.32x is currently well-below the industry average of 40.1x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Fresenius SE KGaA’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of Fresenius SE KGaA look like?

XTRA:FRE Past and Future Earnings, January 30th 2020
XTRA:FRE Past and Future Earnings, January 30th 2020

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 24% over the next couple of years, the future seems bright for Fresenius SE KGaA. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since FRE is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on FRE for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FRE. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Fresenius SE KGaA. You can find everything you need to know about Fresenius SE KGaA in the latest infographic research report. If you are no longer interested in Fresenius SE KGaA, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.