Even after a doubling of the price: the Fresenius stock would not be expensive

that Fresenius-The stock (WKN: 578560) is really cheap at the moment. At least when we look at the basic key figures. A share price of 20.91 euros, earnings per

But other fundamental indicators also reflect this. A dividend of 4.4%, a price-to-sales ratio of 0.3 and other characteristics characterize the evaluation of the Dividend Aristocrat. Quality is also present as a defensive health group.

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However, I would say that even if Fresenius stock doubled, we wouldn’t get an expensive valuation target. Let’s go beyond metrics. But of course also take a closer look at them.

Fresenius share: Even with the price doubling…

Let’s review the example: Fresenius stock will be valued at a price-to-earnings ratio of about 14 after a price doubling. A price-to-sales ratio of 0.6 and a dividend yield of 2.2% with a payout ratio of around 30% isn’t too expensive either. Let’s not forget its quality as a defensive Dividend Aristocrat. As well as the prospect that the management has recently successively increased the dividend per share.

There are reasons why Fresenius stock may not continue in the short to medium term. Medical Care, the sick dialysis specialist, is just one reason. Excess mortality during the corona pandemic continues to cause sales and results to collapse here. But the high level of debt and the prospect of rising interest rates are also a double burden. Partly because the (dividend) return no longer seems so attractive with more attractive interest rate options. But also because rising interest rates with high levels of debt can weigh on the results.

Nevertheless, rising interest rates affect not only Fresenius stock, but the entire economy. If inflation (sooner or later) is successfully combated and turns out to be significantly more moderate, the market may be more inclined to bet on this value stock again. The question for me is when it will happen, not if with a price-to-earnings ratio of just 7 and a 4.4% dividend yield.

100% share price development does not have to be inevitable

Ultimately, whether the Fresenius share price doubles is another question. Even if we did, we’d still be over 45% off the all-time high. The starting point has changed, especially with regard to inflation and the resulting increase in interest rates.

Nevertheless, we see an intact healthcare group that only needs to fine-tune its balance sheet structure. As well as a market that is entirely focused on interest rate and inflation issues. Pricing this at a price-to-earnings ratio of 7 and a 4.4% yield sounds like market overkill to me. Whether for you too? Decide for yourself.

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Vincent owns shares in Fresenius. The Motley Fool recommends Fresenius.

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