FRESENIUS MEDICAL CARE AG (FMS): what the price requires

The current priced-in claim for FRESENIUS MEDICAL CARE AG (FMS) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/FMS

Headline

FieldValue
TickerFMS
CompanyFRESENIUS MEDICAL CARE AG
Current price$24.45/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed2.8%
Operating margin today8.8%
Margin compression implied-6.0pp
Multiple paid10x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7.1% cost of capital with 4% terminal growth over a 5-year stage.

Reconcile: at the x-ray's 9.3% required return this reads ~-4.6%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.31σ
cohort percentile (of 113 peers)6
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.08x5expensive
Earnings0.79x4justifies
Relative0.43x5justifies
Growth0.62x3justifies

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.5%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$109.880.22xyesFCF base $2.9B, growth 2% (input: historical growth), terminal g 1.5%, WACC 5.5%, 5yr projection
DCF Exit MultipleGrowth$39.570.62xyesExit EV/EBITDA: 4.7x / 6.7x / 8.7x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$48.730.50xyesP/E 18x (static sector reference · 2026-04), scenarios: 15.3x / 18.0x / 20.7x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$23.961.02xyesBV/sh $26.57, ROE (TTM) 8.3%, ke 9.3%
Two-Stage Excess ReturnAsset$22.741.08xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$16.621.47xyesRev $21.3B, growth 2% (input: historical growth; tapered), Terminal P/S: 0.6x / 0.7x / 0.8x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$21.911.12xyesEPS $1.83, growth 1% (input: historical EPS growth), PEG=7.62 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$26.190.93xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.73B × (1−21%) / WACC 5.5% → EPV (no growth)
Residual IncomeAsset$22.551.08xyesBV $26.57 + 5yr PV of (ROE (TTM) 8.3% − Kₑ 9.3%) × BV; BV grows 5.4%/yr
Graham NumberAsset$33.040.74xyes√(22.5 × EPS $1.83 × BVPS $26.57) — Graham's conservative floor
EV/EBITDA RelativeRelative$56.950.43xyesEBITDA $3.58B × sector EV/EBITDA 12.0x
FCF YieldEarnings$37.410.65xyesFCF $2914.1M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$58.920.41xyesEPS $1.83 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$9.832.49xyesBV $26.57 × (ROIC 2.0% / WACC 5.5%)
P/Sales SectorRelative$91.300.27xyesRevenue $21.33B × sector P/S 2.5x
PEG Fair ValueRelative$68.480.36xyesEPS $1.83 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$19.741.24xyesEPS $1.83 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$6.5b
Net debt / NOPAT (after-tax)4.24x
Net debt / operating income (pre-tax)3.36x
Interest coverage4.4x
Share count CAGR (buyback)-0.1%
Burning cashno

Bullet Takeaways

The counterintuitive fact about Fresenius Medical Care is that the world's largest dialysis provider, a business with recurring, medically necessary demand, trades at about 10 times operating income and below its book value of roughly $26.57 a share. The market is pricing a defensive healthcare leader as if it were in decline.

The cash generation does not match that pessimism. The business produces roughly $2.9 billion of free cash flow on a trailing basis, and management just completed a $1 billion buyback, repurchasing about 8.5% of the share count. A company shrinking its share base aggressively from real cash flow is not behaving like one the market should value below book.

The reason for the discount is a sector-cycle worry: GLP-1 weight-loss drugs raise the question of whether future dialysis patient growth slows, and a multi-year restructuring is suppressing reported earnings even as margins improve. The bet is that demand proves durable and the cost program delivers.

Bull Case

The surprising thing about Fresenius Medical Care is the mismatch between what the business is and how it is priced. This is the largest dialysis company in the world, treating hundreds of thousands of patients with end-stage kidney disease who need dialysis multiple times a week to stay alive. That is about as non-discretionary as demand gets. Yet the stock trades at roughly 10 times operating income and below its book value of about $26.57 a share, a valuation the market usually reserves for businesses in structural decline. The priced-in assumption sits below what even a steady decline in operating profit would warrant, which is a low bar for a company with this kind of recurring revenue.

The cash flow confirms the franchise is intact. Fresenius generates around $2.9 billion of free cash flow on a trailing basis, and the X-ray reflects it: the DCF-perpetual-growth and FCF-yield frames land far above the current price, and the relative and earnings-power frames also sit well above it. Management has been returning that cash, completing a €1 billion share buyback in under a year, repurchasing 24.8 million shares, about 8.5% of the share capital, while keeping net leverage at 2.6 times, within its stated 2.5 to 3.0 times target. Buying back a large slice of the company below book value is accretive capital allocation.

The operating turnaround is delivering where it counts. In the first quarter of 2026 the group operating-income margin expanded 70 basis points to about 10.1%, and adjusted earnings per share grew double digits, even as reported revenue declined on currency. The FME25+ efficiency program is the engine: it is incurring restructuring costs now, €166 million in the quarter against €50 million of recurring savings, but the expanded program targets €1.2 billion of cumulative sustainable savings by the end of 2027. As those costs roll off and the savings compound, reported earnings should converge toward the underlying earnings power. New technology, including the rollout of the 5008X high-volume hemodiafiltration system across U.S. clinics, and the value-based-care push through Interwell Health, give the franchise growth avenues beyond the core. A reimbursement tailwind helps too: CMS finalized a 2.2% increase in the base U.S. dialysis rate for 2026.

Bear Case

The bear case is a sector-cycle and demand-trajectory case, and the cycle question hanging over dialysis is whether current earnings are sustainable or a peak before a slowdown. The overhang is GLP-1 weight-loss drugs. Obesity and diabetes are major drivers of chronic kidney disease, and if these drugs reduce the incidence of diabetes-related kidney failure over time, the patient population that feeds dialysis demand grows more slowly than it historically has. The market has been pricing that fear into the entire dialysis sector, and it is the simplest explanation for why a recurring-revenue healthcare leader trades below book. The demand base is not at peak today, but the long-run growth rate that justified premium multiples may be lower than it was.

Reimbursement is the second structural risk, and it cuts directly into a business with little pricing power of its own. A large share of Fresenius's U.S. revenue comes from government payors, principally Medicare, whose rates are set administratively rather than negotiated. The 2026 base-rate increase of 2.2% is below medical-cost inflation in many years, so when input costs rise faster than the reimbursement rate, margin compresses. The mix of commercial versus government patients also matters enormously to profitability, and any policy shift that pushes patients toward government rates would pressure earnings. This is a price-taker in its largest market.

The earnings quality and balance sheet add caveats. Reported operating income is being depressed by the FME25+ restructuring, which makes the trailing numbers look better on margin than on absolute profit, and the program's savings are a forecast, not banked. Net leverage at 2.6 times is manageable but not low, and interest coverage near five leaves less cushion than the cash flow headline suggests. Trailing return on equity around 8.3% sits below the cost of equity, which is why the asset-based methods land close to the price rather than far above it; the company is not yet earning an excess return on its capital. The stock is cheap on cash flow, but cheap on cash flow with a flat-to-uncertain demand trajectory, government-set prices, and an unfinished cost program is the kind of cheapness that can persist.

Valuation

Fresenius Medical Care is valued as a whole company off its operating income, and the read is a bound rather than a clean solve. At about $23.59 (June 27, 2026) the American depositary shares trade at roughly 10 times company-wide operating profit, a multiple so low that the price sits below what even a sustained 5% annual decline in operating profit would warrant. The framework states this as a bound: the price is on the cheap side of what an ordinary decline would justify. For the largest dialysis provider in the world, with recurring demand, that is a notably pessimistic price.

The X-ray is unusually consistent in supporting the price, which is what the characterization captures: asset-based, earnings-power, relative-multiple, and even growth-DCF value all sit above the current price. The DCF-perpetual-growth and FCF-yield frames land far above it on roughly $2.9 billion of free cash flow, the relative frame on a sector multiple lands near $48, and the earnings-power frame lands near $27. The asset frames anchor close to the price, near book value of $26.57, because trailing return on equity around 8.3% is just below the cost of equity. The unusual feature is how far below its own history the priced-in assumption sits, which is the quantitative signature of a stock the market has marked down on a narrative rather than on its current numbers.

The honest synthesis is that this is an asset-supported value name, not a growth bet, and the valuation is cheap if the cash flow holds. The franchise generates substantial cash, returns it through buybacks below book, and is expanding margins through the FME25+ program. The risk is in the trajectory the methods cannot fully price: the GLP-1 demand question and reimbursement pressure could lower the sustainable earnings base, in which case the cash-flow methods that currently sit far above the price would step down. The reaffirmed 2026 guidance of broadly flat revenue and continued margin progress is the near-term test.

Catalysts

The most recent catalyst was the first-quarter 2026 report, which the market took poorly despite operational progress, with the shares falling around 7% on the day. Fresenius reported revenue of €4.61 billion, down about 6% reported but up roughly 4% organically at constant currency, net income attributable to shareholders of €117.5 million and earnings of €0.43, with the group operating-income margin expanding 70 basis points to about 10.1%. Reported operating income was held back by €166 million of FME25+ restructuring costs against €50 million of recurring savings in the quarter. Management reaffirmed full-year 2026 guidance for broadly flat revenue.

The dominant forward driver is the FME25+ efficiency program, now expanded to a cumulative €1.2 billion of sustainable savings targeted by the end of 2027. The pace at which restructuring costs roll off and savings convert to reported earnings is the single biggest swing factor for the profit trajectory. Capital returns are the second lever: the company completed a €1 billion buyback in under a year and kept net leverage within its 2.5 to 3.0 times target, so further buyback authorizations are a possible catalyst.

The structural watch items sit on demand and reimbursement. The GLP-1 question, whether weight-loss drugs slow the long-run growth of the dialysis patient population, remains the overhang on the whole sector, and any data clarifying the patient-volume trajectory would move the stock in either direction. On reimbursement, CMS finalized a 2.2% U.S. base-rate increase for 2026, and future rate decisions, plus the commercial-versus-government payor mix, are recurring catalysts. Operationally, the U.S. rollout of the 5008X hemodiafiltration system and progress in value-based care through Interwell Health are the growth initiatives to track.

Sources: Fresenius Medical Care Q1 2026 results and outlook, StockTitan; FMS stock falls on Q1 2026 earnings, Quiver Quantitative+Stock+Falls+on+Q1+2026+Earnings); FMC Q1 2026 margin expansion amid revenue pressure, Investing.com; Fresenius Q1 EPS ex-items +16% and buyback, StockTitan; Fresenius Medical Care Q1 2026 6-K, SEC.

Peer Cohorts (Per Segment, With Filing Citations)

Segment and corporate information (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive FMS report on boothcheck