Entering text into the input field will update the search result below

Fresenius: An 8-20% Undervalued German Giant


  • Fresenius is a massive $35B market cap company out of Germany in the healthcare sector. It's one of few German companies with an alternative listed on the NYSE.
  • This makes investing in the company or segments far simpler than with ADRs and makes the company more potentially appealing for international investors.
  • I recently increased my stake in this company.
  • In this article, I show you why I consider Fresenius a "BUY" here.

Fresenius (OTCPK:FSNUF) (OTCPK:FSNUY) is a large German healthcare company out of Bad Homburg in Hesse. In this article, I want to share this company's foundations and positioning with you, and show you why I consider this company one of the few investable businesses out of Germany.

After abandoning my automotive companies due to excessive cyclicality and volatility and lack of transparency in terms of forwarding returns, I'm extremely selective about my German investments.

However, Fresenius checks all of the boxes.

Let me show you how.

Fresenius - What does the company do?

The company was founded in 1912 by Eduard Fresenius. The company's present focus began back in 1966 when the company began with dialysis. Today, the company's focus and services are centered around dialysis services for hospitals and inpatient/outpatient medical care.

The company is also involved in hospital management and engineering services for healthcare facilities.

The company is a market leader with a global presence in over 100 countries, €36.3B worth of sales in FY20, and over 310,000 employees across the world. In many of its areas, Fresenius holds a #1 market position, allowing the company a decent moat for its products and services.

In previous articles, we've been through that the healthcare sector thanks to population growth, is set to expand significantly. While the companies active in it will likely see margin compressions and cost control, it doesn't change the fact that the market-leading companies will likely enjoy years and decades of profitable growth, if they play their cards right.

The fundamentals are on Fresenius' side.

(Source: Fresenius Investor Presentation)

Fresenius has 4 interesting and excellent operating segments.

(Source: Fresenius Investor Presentation)

  • Fresenius Medical Care is a publicly traded company in its own right, of which Fresenius owns a third. The company/segment focuses on Chronic Kidney failure and is

This article was written by

Wolf Report profile picture

Wolf Report is a senior analyst and private portfolio manager with over 10 years generating value ideas in European and North American markets.

He is a contributing author for the investing group iREIT on Alpha where in addition to the U.S. market, he covers the markets of Scandinavia, Germany, France, UK, Italy, Spain, Portugal and Eastern Europe in search of reasonably valued stock ideas. Learn more.

Analyst’s Disclosure: I am/we are long FSNUF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment. Short-term trading, options trading/investment and futures trading are potentially extremely risky investment styles. They generally are not appropriate for someone with limited capital, limited investment experience, or a lack of understanding for the necessary risk tolerance involved. I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles. Option Disclosure: NO Puts/Calls written

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (16)

whitehead1 profile picture
October 21 and January 22 Calls are so cheap for this company.
If you think price will go up then buying calls makes more sense to get better leverage if someone is comfortable.
21 Mar. 2021
Great article, as they always are.
In this particular case, I'm a bit confused. FRE, FSNUF, FSNUY, FMS... Which is better for a US investor? If I want the parent company, my choices are which? I probably just need to reread it again next week after it all soaks in, LOL.
I have never owned a German company, but if my DD is correct, holding any of these in an IRA (Roth, Rollover or SEP) means that I will net ZERO withholding taxes, correct? (I think I read, withheld, but refunded? I'm not talking about the 1040 or 1116 forms tho). My broker is Schwab and I am unclear if they normally need to file something to designate US investor, nor do I know if it is automatic or not. They are good about filing 990-T (MLPs), so maybe automatic and no charge. (hoping). I'll call them, but you never know if it will go smoothly.
BTW, I'm also looking at E.ON based on another of your articles.
Have a great day!
GROND profile picture
Thanks for the report. This is definitely one of the most defensive opportunities around.
The ratio is 4 FSNUY ADRs to one FRE share. Before I looked that up I thought I was getting an incredible bargain!
Thanks for the report. I have had Fresenius on my watchlist for a pretty long time now. Two things I don't like about the company:
1.) debt situation --> however, the company has a history of paying down debt and as all business units are profitable and rather defensive, there will be enough FCF to pay down debt
2.) profitability --> this is an issue that has been ongoing for several years now, even before Covid-19. To me it seems that Fresenius is no longer able to get new growth with the same profitability.
What is your opinion on my 2nd point? Will Fresenius be able to improve its profitability again in the coming years?
BM Cashflow Detective profile picture
The significant undervaluation of the P / FCF and a good 3-year forward PEG ratio 1.30 make Fresenius SE a buy.

The long-term and holistic orientation as a health company remains very promising. The occupancy rates in hospitals can increase significantly more, taking into account the aging baby boomers or if dialysis services will increase even more in the future. The average of the people in the western world is getting older and with it the sickness benefits are getting more frequent. In the long term, the signs point to growth. This could lead to a fundamental revaluation of the Fresenius share.

At Fresenius Medical Care it's basically a similar picture. Again, the undervaluation to the FCF is enormous. Also a buy with a still good 3-year forward PEG ratio 1.50.

"Despite this increase, the company's payout ratio has remained typically German - stable and rigid, at around 23-27%." lol. Great.

Well, that is certainly not entirely wrong, although it would be possible that completely different considerations also play a role here. But the mental realities that could not be overlooked made me laugh. As the cause, maybe also some painful memories from your time in the Bundeswehr? ;-)

Two stocks that require a lot of patience. But so boring that there must be positive surprises at some point.

I'm long $FSNUF $FMS
Undervalued indeed
Nice write up. Recently bought FMS in the $34s to start a new position.
Interesting stock. Too bad they it too complex to own for USA investors.
Luca Stein profile picture
@jasonjones NYSE Listing ADR ???
@Wolf Report thanks for your detailed article. As I acknowledged in prior comments Fresenius used to be an excellent company. That was when they focused on the dialysis business, i.e. FMC and Kabi, then mainly supplying infusion solutions. However, the group has lost focus when growing both the hospital business (creating large debt&goodwill) and biosimilars, generics. In my view this is not sustainable because it mixes medical facility management with research heavy medical products. Given its current size the group overstretches itself. High financial and operational leverage are adding to the problems especially during the pandemic. Even pre-Covid management lost already credibility after the aborted Akorn acquisition. Operational issues at Kabi (supply chain and product roll out) did not help restore investor trust. Presumably for all these reasons activist investors are targeting FRE. Bridgewater is still short. The shares traded at high teen multiples when it the group kept growing, mainly through acquisitions. Whether FRE can return to its previous growth path remains to be seen. Myself I am sceptical this will happen apart from a bounce back after the Covid induced delays of elective treatments. Therefore and as per my dialogue with contributor Karreta Advisors I see more down than upside. I still hold a decent position which I started to reduce.
mxschumacher profile picture
@heckinvest I don't understand the point about Akorn, that company imploded shortly after. Fresenius dodged a bullet here, their DD worked

Thanks for your comment. I'm wondering if those apply to investors in FMS. I've owned FMS for awhile, and with that ticker trading at a ~13x forward PE and yielding ~2% and having a dominant position in what should be a growth industry going forward due to the aging population, I see very little reason to sell given my long term horizon.
To say upfront I own as well some FRE shares and find the valuation as well attractive at that point, although I'm still hesitating to increase my position. You are right with stating that they have quite a good equity ratio, however you need to bear in mind that their goodwill exceeds even the equity in their balance sheet reviewing their third quarter report. FY accounts I couldn't find yet. The high goodwill based on their acquisition strategy in the past makes me a bit uncomfortable..
Hi, i really like your articles and your style of investing :)

The only thing i dont like about Fresenius SE is the high Interest Expenses and quite a big amount of Goodwill. But to be fair, it has always been like that.

An interesting company for you might be Canadas (ANCUF) Alimentation Couche-Tard. Good growth prospects at an very attractive Valuation. Dont know if you already covered it, but it is definitly worth a look.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!


SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on FMCQF

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.