Zimmer Biomet Holdings, Inc. (NYSE: ZBH)

Sector: Healthcare Industry: Medical Devices CIK: 0001136869
Market Cap 16.58 Bn
P/B 2.82
P/E 23.64
P/S 3.67
ROIC (Qtr) 5.39
Div Yield % 1.03
Rev 1y % (Qtr) 9.71
Total Debt (Qtr) 8.11 Bn
Debt/Equity (Qtr) 0.64
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About

Zimmer Biomet Holdings, Inc., often referred to as ZBH, is a prominent player in the medical technology industry. This company, known for its comprehensive portfolio, is dedicated to enhancing mobility and improving health for its patients. Zimmer Biomet's business activities are diverse and far-reaching. The company operates in various markets, including the Americas, Europe, Middle East, Africa, and Asia Pacific. These regions are home to a multitude of healthcare institutions, stocking distributors, healthcare dealers, and healthcare purchasing...

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Investment thesis

Bull case

  • Healthy cash reserves of 1.29B provide 2.15x coverage of short-term debt 600M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 186.60M provides exceptional 266.57x coverage of minority interest expenses 700000, showing strong core operations.
  • Cash position of 1.29B provides exceptional 1846.71x coverage of minority interest expenses 700000, indicating strong liquidity.
  • Retained earnings of 11.52B provide full 1.53x coverage of long-term debt 7.51B, indicating strong internal capital position.
  • Tangible assets of 9.05B provide robust 6.08x coverage of other current liabilities 1.49B, indicating strong asset backing.

Bear case

  • Operating cash flow of 186.60M barely covers its investment activities of (1.06B), with a coverage ratio of -0.18, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 186.60M provides thin coverage of dividend payments of (190.80M) with a -0.98 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (1.06B) provide weak support for R&D spending of 448.30M, which is -2.36x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 1.29B provide limited coverage of acquisition spending of (1.39B), which is -0.93x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 186.60M shows concerning coverage of stock compensation expenses of 87.20M, with a 2.14 ratio indicating potential earnings quality issues.

Geographical Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Medical Devices
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ABT Abbott Laboratories 173.80 Bn 32.73 5.47 12.94 Bn
2 SYK Stryker Corp 141.15 Bn 43.48 5.62 15.86 Bn
3 MDT Medtronic plc 123.47 Bn 25.92 3.55 29.10 Bn
4 BSX Boston Scientific Corp 112.80 Bn 38.92 5.62 11.44 Bn
5 EW Edwards Lifesciences Corp 45.66 Bn 33.38 7.76 0.70 Bn
6 DXCM Dexcom Inc 27.52 Bn 32.91 5.90 1.34 Bn
7 STE STERIS plc 24.13 Bn 34.08 4.14 2.05 Bn
8 PODD Insulet Corp 17.33 Bn 70.38 6.87 1.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.75 2.13
EV to Cash from Ops. EV/CFO 16.28 2.75
EV to Debt EV to Debt 2.17 17.25
EV to EBIT EV/EBIT 18.05 2.89
EV to EBITDA EV/EBITDA 13.48 4.53
EV to Free Cash Flow [EV/FCF] EV/FCF 22.73 29.36
EV to Market Cap EV to Market Cap 1.06 25.09
EV to Revenue EV/Rev 3.91 32.80
Price to Book Value [P/B] P/B 2.82 4.73
Price to Earnings [P/E] P/E 23.64 -2.04
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 4.22 40.22
Dividend Payout Ratio % Div Payout % (Qtr) 23.60 1.59
Dividend per Basic Share Div per Share (Qtr) 0.96 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -64.95 -0.37
Interest Coverage Int. cover (Qtr) 4.61 196.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.64 -152.08
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 127.19 8,476.58
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -0.44
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -20.91 -792.16
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 8.14 3.79
EBIT Growth (1y) % EBIT 1y % (Qtr) 5.29 -301.80
EBT Growth (1y) % EBT 1y % (Qtr) -1.07 -121.44
EPS Growth (1y) % EPS 1y % (Qtr) -22.96 -87.51
FCF Growth (1y) % FCF 1y % (Qtr) 39.34 10.43
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.97 38.21
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.34 0.55
Cash Payout Ratio Cash Payout (Qtr) 0.29 0.02
Cash Ratio Cash Ratio (Qtr) 0.54 1.80
Current Ratio Curr Ratio (Qtr) 2.43 4.18
Debt to Equity Ratio Debt/Equity (Qtr) 0.64 1.20
Interest Cover Ratio Int Coverage (Qtr) 4.61 196.93
Times Interest Earned Times Interest Earned (Qtr) 4.61 196.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 29.70 -2,396.63
EBIT Margin % EBIT Margin % (Qtr) 16.26 -2,478.60
EBT Margin % EBT Margin % (Qtr) 12.73 -2,690.42
Gross Margin % Gross Margin % (Qtr) 71.40 30.80
Net Profit Margin % Net Margin % (Qtr) 10.10 -2,821.53