A DAX stock with a price-to-earnings ratio (P / E) of only 8.8, defensive class and recently even a small, moderate growth? It almost sounds too good to be true. But it is not, because there is a stock that offers just that.
Fresenius (WKN: 578560): Measured against a current share price of EUR 29.14 and 2021 earnings per share. share above EUR 3.30, the P / E ratio is at this level. But there is more that makes this DAX stock a real steal. Both in terms of valuation and prospects. But also in terms of quality.
Fresenius DAX stock: Besides P / E, generally cheaply rated!
The DAX share Fresenius has a P / E ratio of 8.8. It is probably crucial to say that it is not a value that comes from special effects. No, but history with similarly strong values shows: Such results are possible in a normal financial year. The best rating is even 3.65 euros, which is even slightly above this value.
But other key figures also point to an underestimation. Fresenius currently has a dividend of over 3% with a payout percentage of 28%. Even a doubling of the dividend would be affordable and the payout ratio would be only 56%. It is a strong prospect, especially since the dividend aristocrat’s dividend growth was spot on anyway.
A price-to-sell ratio of less than 0.5 completes the valuation of this cheap DAX stock. But let’s look at other things besides P / E and other measurements. For example, future prospects.
A snapper based on the prospect!
In the financial year 2021, there was moderate earnings growth for the DAX share Fresenius. It continued into the first quarter, where we saw earnings per. share rise 6% to € 0.83. If the trend continues, the moderate growth may continue.
Also crucial: In the outlook, Fresenius’ management is talking about a currency-adjusted increase in net income in the low single-digit percentage for the current year. Yes, growth should therefore be possible.
But measured by its intrinsic values, the DAX stock now appears to be cheap in terms of quality. A little more about the quality. However, management plans to salvage this intrinsic value through Helios restructuring, a merger or a partial sale. Showing what is in the group as a whole could be a good strategy to increase value.
DAX share Fresenius: Quality!
However, the DAX share Fresenius also has a lot of quality. Although it is not necessarily a clean balance sheet, the payout ratio may allow management to invest the released funds in a cleaner balance sheet. The debt is high, but a problem that can be solved.
But let’s stick to the quality: Fresenius is, after all, a dividend aristocrat who has shown significant dividend growth every year. Most recently, for example, by around 4.5% year-on-year, although historically there have been significantly stronger increases. All in all: a strong stock at a reasonable price with an acceptable risk. This DAX stock is not unattractive with a PER of 8.5.
Article P / E 8.8: This DAX stock is a snapper first appeared on The Motley Fool Germany.
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Vincent owns shares in Fresenius. The Motley Fool recommends Fresenius.
Broget Fool Germany 2022