ZIMMER BIOMET HOLDINGS INC (ZBH) Stock Fundamental Analysis
NYSE:ZBH - New York Stock Exchange, Inc. - US98956P1021 - Common Stock - Currency: USD
Overall ZBH gets a fundamental rating of 6 out of 10. We evaluated ZBH against 188 industry peers in the Health Care Equipment & Supplies industry. ZBH scores excellent on profitability, but there are some minor concerns on its financial health. ZBH may be a bit undervalued, certainly considering the very reasonable score on growth ZBH also has an excellent dividend rating. This makes ZBH very considerable for value and dividend investing!
1. Profitability
1.1 Basic Checks
ZBH had positive earnings in the past year.
ZBH had a positive operating cash flow in the past year.
Of the past 5 years ZBH 4 years were profitable.
In the past 5 years ZBH always reported a positive cash flow from operatings.
1.2 Ratios
ZBH has a Return On Assets of 4.12%. This is amongst the best in the industry. ZBH outperforms 82.45% of its industry peers.
The Return On Equity of ZBH (7.37%) is better than 81.91% of its industry peers.
The Return On Invested Capital of ZBH (5.99%) is better than 80.32% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ZBH is in line with the industry average of 7.89%.
The last Return On Invested Capital (5.99%) for ZBH is above the 3 year average (5.98%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.12% | ||
| ROE | 7.37% | ||
| ROIC | 5.99% |
ROA(3y)3.36%
ROA(5y)2.25%
ROE(3y)5.79%
ROE(5y)3.88%
ROIC(3y)5.98%
ROIC(5y)4.96%
1.3 Margins
With an excellent Profit Margin value of 11.86%, ZBH belongs to the best of the industry, outperforming 89.36% of the companies in the same industry.
In the last couple of years the Profit Margin of ZBH has declined.
The Operating Margin of ZBH (19.59%) is better than 92.55% of its industry peers.
ZBH's Operating Margin has improved in the last couple of years.
ZBH's Gross Margin of 71.05% is amongst the best of the industry. ZBH outperforms 81.91% of its industry peers.
In the last couple of years the Gross Margin of ZBH has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.59% | ||
| PM (TTM) | 11.86% | ||
| GM | 71.05% |
OM growth 3Y9.41%
OM growth 5Y4.28%
PM growth 3Y26.01%
PM growth 5Y-3.65%
GM growth 3Y0.08%
GM growth 5Y0.05%
2. Health
2.1 Basic Checks
ZBH has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, ZBH has less shares outstanding
Compared to 5 years ago, ZBH has less shares outstanding
ZBH has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 2.60 indicates that ZBH is not a great score, but indicates only limited risk for bankruptcy at the moment.
ZBH has a Altman-Z score of 2.60. This is in the better half of the industry: ZBH outperforms 64.36% of its industry peers.
ZBH has a debt to FCF ratio of 6.53. This is a slightly negative value and a sign of low solvency as ZBH would need 6.53 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 6.53, ZBH is in the better half of the industry, outperforming 78.19% of the companies in the same industry.
ZBH has a Debt/Equity ratio of 0.53. This is a neutral value indicating ZBH is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.53, ZBH is not doing good in the industry: 62.77% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.53 | ||
| Altman-Z | 2.6 |
ROIC/WACC0.8
WACC7.48%
2.3 Liquidity
ZBH has a Current Ratio of 2.44. This indicates that ZBH is financially healthy and has no problem in meeting its short term obligations.
With a Current ratio value of 2.44, ZBH perfoms like the industry average, outperforming 45.21% of the companies in the same industry.
ZBH has a Quick Ratio of 1.46. This is a normal value and indicates that ZBH is financially healthy and should not expect problems in meeting its short term obligations.
With a Quick ratio value of 1.46, ZBH perfoms like the industry average, outperforming 40.43% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.44 | ||
| Quick Ratio | 1.46 |
3. Growth
3.1 Past
ZBH shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.42%.
The Earnings Per Share has been growing slightly by 0.33% on average over the past years.
The Revenue has been growing slightly by 3.30% in the past year.
The Revenue has been decreasing by -0.77% on average over the past years.
EPS 1Y (TTM)3.42%
EPS 3Y2.77%
EPS 5Y0.33%
EPS Q2Q%-6.7%
Revenue 1Y (TTM)3.3%
Revenue growth 3Y3.99%
Revenue growth 5Y-0.77%
Sales Q2Q%1.05%
3.2 Future
Based on estimates for the next years, ZBH will show a small growth in Earnings Per Share. The EPS will grow by 5.73% on average per year.
ZBH is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.93% yearly.
EPS Next Y0.79%
EPS Next 2Y2.49%
EPS Next 3Y4.99%
EPS Next 5Y5.73%
Revenue Next Year6.71%
Revenue Next 2Y6.17%
Revenue Next 3Y5.62%
Revenue Next 5Y4.93%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
ZBH is valuated reasonably with a Price/Earnings ratio of 11.85.
Based on the Price/Earnings ratio, ZBH is valued cheaper than 93.09% of the companies in the same industry.
ZBH is valuated cheaply when we compare the Price/Earnings ratio to 26.60, which is the current average of the S&P500 Index.
ZBH is valuated reasonably with a Price/Forward Earnings ratio of 11.10.
ZBH's Price/Forward Earnings ratio is rather cheap when compared to the industry. ZBH is cheaper than 90.43% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of ZBH to the average of the S&P500 Index (22.39), we can say ZBH is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.85 | ||
| Fwd PE | 11.1 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ZBH indicates a rather cheap valuation: ZBH is cheaper than 92.02% of the companies listed in the same industry.
89.89% of the companies in the same industry are more expensive than ZBH, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.78 | ||
| EV/EBITDA | 9.7 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ZBH does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of ZBH may justify a higher PE ratio.
PEG (NY)14.91
PEG (5Y)36.11
EPS Next 2Y2.49%
EPS Next 3Y4.99%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.04%, ZBH has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.89, ZBH pays a better dividend. On top of this ZBH pays more dividend than 93.62% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, ZBH's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.04% |
5.2 History
The dividend of ZBH has a limited annual growth rate of 0.19%.
ZBH has paid a dividend for at least 10 years, which is a reliable track record.
ZBH has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)0.19%
Div Incr Years0
Div Non Decr Years12
5.3 Sustainability
21.28% of the earnings are spent on dividend by ZBH. This is a low number and sustainable payout ratio.
ZBH's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP21.28%
EPS Next 2Y2.49%
EPS Next 3Y4.99%
93.26
-0.98 (-1.04%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupHealth Care Equipment & Services
GICS IndustryHealth Care Equipment & Supplies
Earnings (Last)
Earnings (Next)
Inst Owners93.34%
Inst Owner Change1.69%
Ins Owners0.08%
Ins Owner Change13.49%
Market Cap18.45B
Analysts70.29
Price Target110.74 (18.74%)
Short Float %3.01%
Short Ratio2.43
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.04% |
Yearly Dividend0.97
Dividend Growth(5Y)0.19%
DP21.28%
Div Incr Years0
Div Non Decr Years12
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.45%
Min EPS beat(2)-0.34%
Max EPS beat(2)1.25%
EPS beat(4)2
Avg EPS beat(4)0.07%
Min EPS beat(4)-0.7%
Max EPS beat(4)1.25%
EPS beat(8)5
Avg EPS beat(8)0.74%
EPS beat(12)9
Avg EPS beat(12)2.68%
EPS beat(16)12
Avg EPS beat(16)2.85%
Revenue beat(2)0
Avg Revenue beat(2)-0.39%
Min Revenue beat(2)-0.53%
Max Revenue beat(2)-0.26%
Revenue beat(4)1
Avg Revenue beat(4)-0.27%
Min Revenue beat(4)-0.92%
Max Revenue beat(4)0.62%
Revenue beat(8)3
Avg Revenue beat(8)-0.09%
Revenue beat(12)7
Avg Revenue beat(12)1%
Revenue beat(16)8
Avg Revenue beat(16)-1.56%
PT rev (1m)-2.75%
PT rev (3m)-10.34%
EPS NQ rev (1m)-1.22%
EPS NQ rev (3m)-2.64%
EPS NY rev (1m)-2.78%
EPS NY rev (3m)-2.71%
Revenue NQ rev (1m)1.22%
Revenue NQ rev (3m)3.49%
Revenue NY rev (1m)0.77%
Revenue NY rev (3m)3.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.85 | ||
| Fwd PE | 11.1 | ||
| P/S | 2.4 | ||
| P/FCF | 16.78 | ||
| P/OCF | 11.16 | ||
| P/B | 1.49 | ||
| P/tB | N/A | ||
| EV/EBITDA | 9.7 |
EPS(TTM)7.87
EY8.44%
EPS(NY)8.4
Fwd EY9.01%
FCF(TTM)5.56
FCFY5.96%
OCF(TTM)8.36
OCFY8.96%
SpS38.91
BVpS62.65
TBVpS-5.37
PEG (NY)14.91
PEG (5Y)36.11
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.12% | ||
| ROE | 7.37% | ||
| ROCE | 7.58% | ||
| ROIC | 5.99% | ||
| ROICexc | 6.44% | ||
| ROICexgc | 23.6% | ||
| OM | 19.59% | ||
| PM (TTM) | 11.86% | ||
| GM | 71.05% | ||
| FCFM | 14.29% |
ROA(3y)3.36%
ROA(5y)2.25%
ROE(3y)5.79%
ROE(5y)3.88%
ROIC(3y)5.98%
ROIC(5y)4.96%
ROICexc(3y)6.12%
ROICexc(5y)5.09%
ROICexgc(3y)23.89%
ROICexgc(5y)20.99%
ROCE(3y)7.57%
ROCE(5y)6.28%
ROICexcg growth 3Y6.94%
ROICexcg growth 5Y-1.82%
ROICexc growth 3Y16.05%
ROICexc growth 5Y5.83%
OM growth 3Y9.41%
OM growth 5Y4.28%
PM growth 3Y26.01%
PM growth 5Y-3.65%
GM growth 3Y0.08%
GM growth 5Y0.05%
F-Score5
Asset Turnover0.35
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.53 | ||
| Debt/EBITDA | 2.61 | ||
| Cap/Depr | 54.76% | ||
| Cap/Sales | 7.2% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 65.63% | ||
| Profit Quality | 120.41% | ||
| Current Ratio | 2.44 | ||
| Quick Ratio | 1.46 | ||
| Altman-Z | 2.6 |
F-Score5
WACC7.48%
ROIC/WACC0.8
Cap/Depr(3y)60.17%
Cap/Depr(5y)52.93%
Cap/Sales(3y)7.84%
Cap/Sales(5y)7.09%
Profit Quality(3y)183.11%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)3.42%
EPS 3Y2.77%
EPS 5Y0.33%
EPS Q2Q%-6.7%
EPS Next Y0.79%
EPS Next 2Y2.49%
EPS Next 3Y4.99%
EPS Next 5Y5.73%
Revenue 1Y (TTM)3.3%
Revenue growth 3Y3.99%
Revenue growth 5Y-0.77%
Sales Q2Q%1.05%
Revenue Next Year6.71%
Revenue Next 2Y6.17%
Revenue Next 3Y5.62%
Revenue Next 5Y4.93%
EBIT growth 1Y1.15%
EBIT growth 3Y13.78%
EBIT growth 5Y3.48%
EBIT Next Year33.07%
EBIT Next 3Y12.77%
EBIT Next 5Y10.26%
FCF growth 1Y26.08%
FCF growth 3Y-5.87%
FCF growth 5Y0.84%
OCF growth 1Y22.05%
OCF growth 3Y0%
OCF growth 5Y-1.11%