1 German value share currently available at a discounted price! | news

Looking for a value stock? After the sale of growth shares, the so-called value shares are more in focus. These are good value stocks. They are usually associated with a robust business model with solid growth prospects.

Such shares could be a real alternative to cope with the current turmoil in the financial markets. The only question is which stocks this could be at the moment. Well, if you look at the German market, a company like Fresenius (WKN: 578560) on.

The DAX stock is currently trading at a single-digit price-to-earnings ratio. The Fresenius share also offers an attractive dividend yield and possible growth potential. Let’s see where the great opportunities and risks of the Fresenius share may lie.

Fresenius share: German dividend aristocrat

that Fresenius’ share is one of the few dividend aristocrats from Germany. A dividend was paid for the last financial year 2021, which was 5% higher than the previous year’s dividend – the 29th dividend increase in a row.

Shares in the Bad Homburg-based healthcare conglomerate are currently trading at an expected price-to-earnings ratio of 8.3 and a dividend yield of 3.3% (as of 07/20/22, Reuters).

Risks

Investors’ pessimism may be due to a number of problems. The most current would be the problems in the dialysis subsidiary Fresenius Medical Care.

The company is not only fighting excessive patient mortality due to COVID-19. A court order from competitor Davita, which suffered a Supreme Court defeat on higher dialysis reimbursement, is also a burden. Fresenius Medical Care is not yet affected by this.

At group level, Fresenius faces cost inflation and supply chain bottlenecks. The current rising interest rate environment can also be challenging, because the Fresenius group still has some borrowed capital on the books.

Last but not least, Fresenius must find a way back to stronger growth. The current corporate structure is confusing and paralyzing for investors.

The chance

When it comes to opportunities, the healthcare market is the first to be cited. With its four business areas (Fresenius Medical Care, Helios, Kabi and Vamed), Fresenius has leading positions in growing and at the same time non-cyclical markets. One can therefore take advantage of the megatrends in health and demography, which should develop particularly well in industrialized countries.

The company’s diversification can also protect investors because Fresenius is not dependent on a single market. This all applies not only from the product side, but also from the geographical perspective.

For me, the biggest argument for Fresenius stock at the moment would probably be the cheap valuation. It already prices some risks and can offer some safety buffer for investors.

Investors can also benefit from further increases in dividends in the future because management expects revenue and profits to continue to increase in the current fiscal year 2022.

According to the dividend policy, which provides a payout percentage of 20 to 25% based on earnings per share, the 30th constant increase could be announced as early as next year.

Article 1 German value share currently available at a discounted price! first appeared on The Motley Fool Germany.

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Frank Seehawer owns shares in Fresenius. The Motley Fool recommends Fresenius.

Motley Fool Germany 2022

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