ZIMMER BIOMET HOLDINGS INC (NYSE:ZBH) was identified as a decent value stock by our screener. The company, a leader in orthopedic medical devices, shows strong profitability and reasonable valuation metrics while maintaining financial health. Here’s why ZBH stands out as a potential opportunity for value investors.
Valuation
ZBH scores an 8/10 in valuation, indicating it is priced attractively compared to peers and broader market benchmarks:
- P/E Ratio: At 11.71, it is significantly lower than both the industry average (28.00) and the S&P 500 (26.25).
- Forward P/E: 10.97 suggests continued undervaluation relative to future earnings expectations.
- Enterprise Value/EBITDA: ZBH trades cheaper than 91% of its industry peers.
Profitability
With a profitability rating of 8/10, ZBH demonstrates strong earnings power:
- Return on Equity (ROE): 7.37%, outperforming 82% of competitors.
- Operating Margin: 19.59%, ranking in the top 8% of the sector.
- Gross Margin: A healthy 71.05%, reflecting pricing power and cost efficiency.
Financial Health
ZBH holds a 5/10 health rating, with some strengths and minor concerns:
- Liquidity: A current ratio of 2.44 indicates no short-term solvency risks.
- Debt: A manageable debt-to-equity ratio of 0.53, though slightly higher than last year.
- Cash Flow: Debt-to-FCF ratio of 6.53 suggests moderate leverage but still better than 78% of peers.
Growth
While growth is modest (4/10), there are positive signs:
- Revenue Growth: Expected to rise 4.62% annually, an improvement over past declines.
- EPS Acceleration: Forecasted EPS growth of 7.76% outpaces recent trends.
Our Decent Value Stocks screener lists more stocks with similar characteristics.
For a deeper dive, review the full fundamental report on ZBH.
Disclaimer
This is not investment advice. Always conduct your own research before making investment decisions.
