February 1, 2019

Dräger shares now favorable due to price drop



The share price of the German mechanical engineering company Dräger dropped by as much as 50%. Due to this drop, most investors draw the conclusion that there is something wrong with the company and are staying away from the stock. But the market makes mistakes sometimes, which it then has to correct again. This could also be the reason for Dräger's sharp price drop.

Now the share price is low compared to the size of the company. This is also the reason why the share has a good Obermatt Value Rank, because the lower the share price relative to its size, the better the Value Rank. This is precisely why Dräger has made it onto our Top 10 list of tecDAX companies. Let's take a closer look why:

Dräger Value Ranks 2015 to 2018

The chart shows the Obermatt Value Ranks. The share price is compared with revenue, profit, and share capital. Measured by these metrics, the share price is favorable because the Obermatt Value Ranks are high.

Only the dividend at Dräger is below average. Many investors interpret this as a disadvantage. They prefer high dividends. But this can also be misleading, because a low dividend yield can also mean that the company wants to reinvest the profits. It could therefore be an indication of future potential. This would then be a good sign.

To determine this, I take a close look at the Dräger corporate strategy. I found that the company is increasingly focused on growth markets and the range of services it offers. The goal is also to accelerate the innovation processes. These are all good signs. German companies are known for their stability and quality - a little more momentum won't hurt. Reasons enough for us to buy Dräger shares for our current portfolio.



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