ZIMMER BIOMET HOLDINGS INC (ZBH) Stock Fundamental Analysis
NYSE:ZBH - New York Stock Exchange, Inc. - US98956P1021 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to ZBH. ZBH was compared to 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. This makes ZBH very considerable 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.
In the past 5 years ZBH always reported a positive cash flow from operatings.
1.2 Ratios
ZBH has a better Return On Assets (4.12%) than 82.35% of its industry peers.
ZBH has a Return On Equity of 7.37%. This is amongst the best in the industry. ZBH outperforms 81.82% of its industry peers.
Looking at the Return On Invested Capital, with a value of 5.99%, ZBH belongs to the top of the industry, outperforming 80.21% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ZBH is in line with the industry average of 7.89%.
The 3 year average ROIC (5.98%) for ZBH is below the current ROIC(5.99%), indicating increased profibility in the last year.
| 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
Looking at the Profit Margin, with a value of 11.86%, ZBH belongs to the top 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.
ZBH has a Operating Margin of 19.59%. This is amongst the best in the industry. ZBH outperforms 92.51% of its industry peers.
In the last couple of years the Operating Margin of ZBH has grown nicely.
ZBH's Gross Margin of 71.05% is amongst the best of the industry. ZBH outperforms 81.82% 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.
ZBH has less shares outstanding than it did 1 year ago.
The number of shares outstanding for ZBH has been reduced compared to 5 years ago.
Compared to 1 year ago, ZBH has a worse debt to assets ratio.
2.2 Solvency
ZBH has an Altman-Z score of 2.59. 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 Altman-Z score of 2.59. This is in the better half of the industry: ZBH outperforms 63.64% 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.
The Debt to FCF ratio of ZBH (6.53) is better than 78.07% of its industry peers.
A Debt/Equity ratio of 0.53 indicates that ZBH is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.53, ZBH is doing worse than 62.03% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.53 | ||
| Altman-Z | 2.59 |
ROIC/WACC0.76
WACC7.86%
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 has a Quick ratio (1.46) which is in line with 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%.
Measured over the past 5 years, ZBH shows a small growth in Earnings Per Share. The EPS has been growing by 0.33% on average per year.
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.
Based on estimates for the next years, ZBH will show a small growth in Revenue. The Revenue will grow by 4.93% on average per year.
EPS Next Y0.57%
EPS Next 2Y2.39%
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
The Price/Earnings ratio is 11.90, which indicates a very decent valuation of ZBH.
Based on the Price/Earnings ratio, ZBH is valued cheaply inside the industry as 93.58% of the companies are valued more expensively.
ZBH's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 27.45.
With a Price/Forward Earnings ratio of 11.17, the valuation of ZBH can be described as very reasonable.
90.91% of the companies in the same industry are more expensive than ZBH, based on the Price/Forward Earnings ratio.
ZBH's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.90.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.9 | ||
| Fwd PE | 11.17 |
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.
89.30% 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 | 16.85 | ||
| EV/EBITDA | 9.64 |
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.
ZBH has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)20.78
PEG (5Y)36.26
EPS Next 2Y2.39%
EPS Next 3Y4.85%
5. Dividend
5.1 Amount
ZBH has a Yearly Dividend Yield of 1.05%. Purely for dividend investing, there may be better candidates out there.
ZBH's Dividend Yield is rather good when compared to the industry average which is at 1.82. ZBH pays more dividend than 94.12% of the companies in the same industry.
With a Dividend Yield of 1.05, ZBH pays less dividend than the S&P500 average, which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.05% |
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
ZBH pays out 21.28% of its income as dividend. This is a sustainable payout ratio.
ZBH's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP21.28%
EPS Next 2Y2.39%
EPS Next 3Y4.85%
93.67
+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 Change1.69%
Ins Owners0.13%
Ins Owner Change13.28%
Market Cap18.53B
Analysts70.29
Price Target109.55 (16.95%)
Short Float %3.25%
Short Ratio2.7
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.05% |
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)-3.79%
PT rev (3m)-11.07%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-2.03%
EPS NY rev (1m)-0.22%
EPS NY rev (3m)-2.93%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)3.49%
Revenue NY rev (1m)0.12%
Revenue NY rev (3m)3.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.9 | ||
| Fwd PE | 11.17 | ||
| P/S | 2.41 | ||
| P/FCF | 16.85 | ||
| P/OCF | 11.2 | ||
| P/B | 1.5 | ||
| P/tB | N/A | ||
| EV/EBITDA | 9.64 |
EPS(TTM)7.87
EY8.4%
EPS(NY)8.39
Fwd EY8.95%
FCF(TTM)5.56
FCFY5.93%
OCF(TTM)8.36
OCFY8.92%
SpS38.91
BVpS62.65
TBVpS-5.37
PEG (NY)20.78
PEG (5Y)36.26
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 | 2.59 |
F-Score5
WACC7.86%
ROIC/WACC0.76
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 Y0.57%
EPS Next 2Y2.39%
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%