ZIMMER BIOMET HOLDINGS INC (ZBH) Stock Fundamental Analysis
NYSE:ZBH - New York Stock Exchange, Inc. - US98956P1021 - Common Stock - Currency: USD
ZBH gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 187 industry peers in the Health Care Equipment & Supplies industry. While ZBH has a great profitability rating, there are some minor concerns on its financial health. ZBH scores decently on growth, while it is valued quite cheap. This could make an interesting combination. ZBH also has an excellent dividend rating. These ratings could make ZBH a good candidate for value and dividend investing.
1. Profitability
1.1 Basic Checks
ZBH had positive earnings in the past year.
In the past year ZBH had a positive cash flow from operations.
Of the past 5 years ZBH 4 years were profitable.
ZBH had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
ZBH has a better Return On Assets (4.12%) than 82.35% of its industry peers.
ZBH's Return On Equity of 7.37% is amongst the best of the industry. ZBH outperforms 81.82% of its industry peers.
The Return On Invested Capital of ZBH (5.99%) is better than 80.21% of its industry peers.
ZBH had an Average Return On Invested Capital over the past 3 years of 5.98%. This 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 89.30% 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 92.51% of its industry peers.
In the last couple of years the Operating Margin of ZBH has grown nicely.
Looking at the Gross Margin, with a value of 71.05%, ZBH belongs to the top of the industry, outperforming 81.82% of the companies in the same industry.
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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), ZBH is destroying value.
Compared to 1 year ago, ZBH has less shares outstanding
The number of shares outstanding for ZBH has been reduced compared to 5 years ago.
The debt/assets ratio for ZBH is higher compared to a year ago.
2.2 Solvency
ZBH has an Altman-Z score of 2.60. This is not the best score and indicates that ZBH is in the grey zone with still only limited risk for bankruptcy at the moment.
ZBH has a better Altman-Z score (2.60) than 63.64% of its industry peers.
The Debt to FCF ratio of ZBH is 6.53, which is on the high side as it means it would take ZBH, 6.53 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 6.53, ZBH is doing good in the industry, outperforming 78.07% 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.
ZBH has a Debt to Equity ratio of 0.53. This is in the lower half of the industry: ZBH underperforms 62.03% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.53 | ||
| Altman-Z | 2.6 |
ROIC/WACC0.8
WACC7.51%
2.3 Liquidity
A Current Ratio of 2.44 indicates that ZBH has no problem at all paying its short term obligations.
With a Current ratio value of 2.44, ZBH perfoms like the industry average, outperforming 45.45% 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.
ZBH's Quick ratio of 1.46 is in line compared to the rest of the industry. ZBH outperforms 40.64% of its industry peers.
| 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.
ZBH shows a small growth in Revenue. In the last year, the Revenue has grown by 3.30%.
ZBH shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -0.77% yearly.
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
The Earnings Per Share is expected to grow by 5.73% on average over the next years.
ZBH is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.93% yearly.
EPS Next Y0.6%
EPS Next 2Y2.46%
EPS Next 3Y4.85%
EPS Next 5Y5.73%
Revenue Next Year6.71%
Revenue Next 2Y6.17%
Revenue Next 3Y5.61%
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
Based on the Price/Earnings ratio of 11.95, the valuation of ZBH can be described as reasonable.
Compared to the rest of the industry, the Price/Earnings ratio of ZBH indicates a rather cheap valuation: ZBH is cheaper than 91.98% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of ZBH to the average of the S&P500 Index (27.19), we can say ZBH is valued rather cheaply.
The Price/Forward Earnings ratio is 11.20, which indicates a very decent valuation of ZBH.
Based on the Price/Forward Earnings ratio, ZBH is valued cheaper than 88.77% of the companies in the same industry.
ZBH's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 35.33.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.95 | ||
| Fwd PE | 11.2 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ZBH is valued cheaper than 91.98% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ZBH is valued cheaply inside the industry as 89.30% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.92 | ||
| EV/EBITDA | 9.67 |
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)19.79
PEG (5Y)36.4
EPS Next 2Y2.46%
EPS Next 3Y4.85%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.01%, ZBH has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.75, ZBH pays a better dividend. On top of this ZBH pays more dividend than 94.12% of the companies listed in the same industry.
With a Dividend Yield of 1.01, ZBH pays less dividend than the S&P500 average, which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.01% |
5.2 History
The dividend of ZBH has a limited annual growth rate of 0.19%.
ZBH has been paying a dividend for at least 10 years, so it has a reliable track record.
ZBH has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
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 2Y2.46%
EPS Next 3Y4.85%
94.03
+0.17 (+0.18%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupHealth Care Equipment & Services
GICS IndustryHealth Care Equipment & Supplies
Earnings (Last)
Earnings (Next)
Inst Owners95.46%
Inst Owner Change-0.01%
Ins Owners0.13%
Ins Owner Change13.5%
Market Cap18.60B
Analysts69.71
Price Target109.55 (16.51%)
Short Float %4.27%
Short Ratio3.55
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.01% |
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)-1.07%
PT rev (3m)-11.21%
EPS NQ rev (1m)0.18%
EPS NQ rev (3m)-1.89%
EPS NY rev (1m)-0.19%
EPS NY rev (3m)-2.9%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)3.39%
Revenue NY rev (1m)0%
Revenue NY rev (3m)3.69%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.95 | ||
| Fwd PE | 11.2 | ||
| P/S | 2.42 | ||
| P/FCF | 16.92 | ||
| P/OCF | 11.25 | ||
| P/B | 1.5 | ||
| P/tB | N/A | ||
| EV/EBITDA | 9.67 |
EPS(TTM)7.87
EY8.37%
EPS(NY)8.4
Fwd EY8.93%
FCF(TTM)5.56
FCFY5.91%
OCF(TTM)8.36
OCFY8.89%
SpS38.91
BVpS62.65
TBVpS-5.37
PEG (NY)19.79
PEG (5Y)36.4
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
WACC7.51%
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 Y0.6%
EPS Next 2Y2.46%
EPS Next 3Y4.85%
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 3Y5.61%
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%