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 189 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 is valued quite cheap, while showing a decent growth score. This is a good combination!
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.
ZBH had positive earnings in 4 of the past 5 years.
In the past 5 years ZBH always reported a positive cash flow from operatings.
1.2 Ratios
With an excellent Return On Assets value of 4.23%, ZBH belongs to the best of the industry, outperforming 81.48% of the companies in the same industry.
With an excellent Return On Equity value of 7.25%, ZBH belongs to the best of the industry, outperforming 80.95% of the companies in the same industry.
ZBH has a better Return On Invested Capital (6.51%) than 82.01% 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 7.68%.
The 3 year average ROIC (5.98%) for ZBH is below the current ROIC(6.51%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.23% | ||
| ROE | 7.25% | ||
| ROIC | 6.51% |
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
Looking at the Profit Margin, with a value of 11.77%, ZBH belongs to the top of the industry, outperforming 89.42% of the companies in the same industry.
In the last couple of years the Profit Margin of ZBH has declined.
ZBH has a Operating Margin of 20.30%. This is amongst the best in the industry. ZBH outperforms 93.12% of its industry peers.
ZBH's Operating Margin has improved in the last couple of years.
ZBH has a better Gross Margin (71.46%) than 81.48% 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 | 20.3% | ||
| PM (TTM) | 11.77% | ||
| GM | 71.46% |
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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so ZBH is destroying value.
The number of shares outstanding for ZBH has been reduced compared to 1 year ago.
ZBH has less shares outstanding than it did 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 2.83. 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.
Looking at the Altman-Z score, with a value of 2.83, ZBH is in the better half of the industry, outperforming 69.31% of the companies in the same industry.
The Debt to FCF ratio of ZBH is 6.88, which is on the high side as it means it would take ZBH, 6.88 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 6.88, ZBH is in the better half of the industry, outperforming 76.72% of the companies in the same industry.
ZBH has a Debt/Equity ratio of 0.43. This is a healthy value indicating a solid balance between debt and equity.
ZBH has a Debt to Equity ratio (0.43) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.43 | ||
| Debt/FCF | 6.88 | ||
| Altman-Z | 2.83 |
ROIC/WACC0.79
WACC8.21%
2.3 Liquidity
ZBH has a Current Ratio of 1.91. This is a normal value and indicates that ZBH is financially healthy and should not expect problems in meeting its short term obligations.
ZBH has a worse Current ratio (1.91) than 68.78% of its industry peers.
ZBH has a Quick Ratio of 1.91. This is a bad value and indicates that ZBH is not financially healthy enough and could expect problems in meeting its short term obligations.
ZBH's Quick ratio of 0.99 is on the low side compared to the rest of the industry. ZBH is outperformed by 78.84% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.91 | ||
| Quick Ratio | 0.99 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 5.82% over the past year.
ZBH shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 0.33% yearly.
ZBH shows a small growth in Revenue. In the last year, the Revenue has grown by 3.84%.
The Revenue has been decreasing by -0.77% on average over the past years.
EPS 1Y (TTM)5.82%
EPS 3Y2.77%
EPS 5Y0.33%
EPS Q2Q%5%
Revenue 1Y (TTM)3.84%
Revenue growth 3Y3.99%
Revenue growth 5Y-0.77%
Sales Q2Q%4.28%
3.2 Future
The Earnings Per Share is expected to grow by 7.76% 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 4.62% yearly.
EPS Next Y3.68%
EPS Next 2Y5.72%
EPS Next 3Y6.7%
EPS Next 5Y7.76%
Revenue Next Year2.92%
Revenue Next 2Y3.83%
Revenue Next 3Y3.86%
Revenue Next 5Y4.62%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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 12.73, the valuation of ZBH can be described as correct.
Compared to the rest of the industry, the Price/Earnings ratio of ZBH indicates a rather cheap valuation: ZBH is cheaper than 91.01% of the companies listed in the same industry.
ZBH is valuated cheaply when we compare the Price/Earnings ratio to 28.88, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 12.28 indicates a correct valuation of ZBH.
Based on the Price/Forward Earnings ratio, ZBH is valued cheaper than 89.42% of the companies in the same industry.
ZBH is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.20, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.73 | ||
| Fwd PE | 12.28 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ZBH is valued cheaper than 89.95% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ZBH is valued cheaper than 85.19% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.33 | ||
| EV/EBITDA | 10.2 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
ZBH has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)3.46
PEG (5Y)38.78
EPS Next 2Y5.72%
EPS Next 3Y6.7%
5. Dividend
5.1 Amount
ZBH has a yearly dividend return of 0.95%, which is pretty low.
ZBH's Dividend Yield is rather good when compared to the industry average which is at 1.87. ZBH pays more dividend than 93.12% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.45, ZBH's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.95% |
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 Years11
5.3 Sustainability
ZBH pays out 21.69% of its income as dividend. This is a sustainable payout ratio.
The dividend of ZBH is growing, but earnings are growing more, so the dividend growth is sustainable.
DP21.69%
EPS Next 2Y5.72%
EPS Next 3Y6.7%
101.82
-1.23 (-1.19%)
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 Change-0.16%
Ins Owners0.08%
Ins Owner Change14.61%
Market Cap20.14B
Analysts70.29
Price Target123.67 (21.46%)
Short Float %3.18%
Short Ratio3.07
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.95% |
Yearly Dividend0.97
Dividend Growth(5Y)0.19%
DP21.69%
Div Incr Years0
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.52%
Min EPS beat(2)-0.7%
Max EPS beat(2)-0.34%
EPS beat(4)2
Avg EPS beat(4)0.44%
Min EPS beat(4)-0.7%
Max EPS beat(4)2.75%
EPS beat(8)5
Avg EPS beat(8)2.36%
EPS beat(12)9
Avg EPS beat(12)3.67%
EPS beat(16)12
Avg EPS beat(16)3.44%
Revenue beat(2)1
Avg Revenue beat(2)0.04%
Min Revenue beat(2)-0.53%
Max Revenue beat(2)0.62%
Revenue beat(4)2
Avg Revenue beat(4)-0.19%
Min Revenue beat(4)-0.92%
Max Revenue beat(4)0.62%
Revenue beat(8)4
Avg Revenue beat(8)0.74%
Revenue beat(12)8
Avg Revenue beat(12)1.34%
Revenue beat(16)9
Avg Revenue beat(16)-1.29%
PT rev (1m)0.13%
PT rev (3m)-2.25%
EPS NQ rev (1m)0.02%
EPS NQ rev (3m)-13.92%
EPS NY rev (1m)0.07%
EPS NY rev (3m)-4.37%
Revenue NQ rev (1m)0.05%
Revenue NQ rev (3m)-3.96%
Revenue NY rev (1m)0.14%
Revenue NY rev (3m)-1.46%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.73 | ||
| Fwd PE | 12.28 | ||
| P/S | 2.62 | ||
| P/FCF | 22.33 | ||
| P/OCF | 13.43 | ||
| P/B | 1.62 | ||
| P/tB | N/A | ||
| EV/EBITDA | 10.2 |
EPS(TTM)8
EY7.86%
EPS(NY)8.29
Fwd EY8.15%
FCF(TTM)4.56
FCFY4.48%
OCF(TTM)7.58
OCFY7.44%
SpS38.81
BVpS63.02
TBVpS-5.47
PEG (NY)3.46
PEG (5Y)38.78
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.23% | ||
| ROE | 7.25% | ||
| ROCE | 8.24% | ||
| ROIC | 6.51% | ||
| ROICexc | 6.7% | ||
| ROICexgc | 25.45% | ||
| OM | 20.3% | ||
| PM (TTM) | 11.77% | ||
| GM | 71.46% | ||
| FCFM | 11.75% |
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-Score6
Asset Turnover0.36
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.43 | ||
| Debt/FCF | 6.88 | ||
| Debt/EBITDA | 2.09 | ||
| Cap/Depr | 59.93% | ||
| Cap/Sales | 7.78% | ||
| Interest Coverage | 7.76 | ||
| Cash Conversion | 58.68% | ||
| Profit Quality | 99.83% | ||
| Current Ratio | 1.91 | ||
| Quick Ratio | 0.99 | ||
| Altman-Z | 2.83 |
F-Score6
WACC8.21%
ROIC/WACC0.79
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)5.82%
EPS 3Y2.77%
EPS 5Y0.33%
EPS Q2Q%5%
EPS Next Y3.68%
EPS Next 2Y5.72%
EPS Next 3Y6.7%
EPS Next 5Y7.76%
Revenue 1Y (TTM)3.84%
Revenue growth 3Y3.99%
Revenue growth 5Y-0.77%
Sales Q2Q%4.28%
Revenue Next Year2.92%
Revenue Next 2Y3.83%
Revenue Next 3Y3.86%
Revenue Next 5Y4.62%
EBIT growth 1Y5.83%
EBIT growth 3Y13.78%
EBIT growth 5Y3.48%
EBIT Next Year33.3%
EBIT Next 3Y13.4%
EBIT Next 5Y9.77%
FCF growth 1Y1.11%
FCF growth 3Y-5.87%
FCF growth 5Y0.84%
OCF growth 1Y-5.2%
OCF growth 3Y0%
OCF growth 5Y-1.11%