blue and silver stetoscope

Zimmer Biomet (NYSE:ZBH) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Zimmer Biomet Holdings, Inc. (NYSE:ZBH) is scheduled to report Q3 earnings results on November 6, 2020.

The company is expected to report earnings of $1.07/share on revenue of $1.714 billion. The consensus earnings per share (EPS) of $1.07/share is based on a poll of 28 analysts and represents a decline in eps of −39.7% over the same quarter last year, when the company reported earnings of $1.77/share.

The revenue forecast of $1.714 billion based on a poll of 25 analysts implies a year-over-year (YoY) decline in revenue of −9.4%. Last year the company reported $1.892 billion in revenue for the quarter.

Expected to report EPS contraction of −39.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,714.06 $1,892.40 −9.4%
EPS $1.07 $1.77 −39.7%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Zimmer Biomet Holdings, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.63 $0.05 108.0% Beat
Q1, 2020 $1.47 $1.70 15.7% Beat
Q4, 2019 $2.27 $2.30 1.4% Beat
Q3, 2019 $1.75 $1.77 1.0% Beat
Q2, 2019 $1.91 $1.93 0.8% Beat
Q1, 2019 $1.86 $1.87 0.3% Beat
Q4, 2018 $2.17 $2.18 0.5% Beat
Q3, 2018 $1.60 $1.63 1.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −1.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $135.72 $133.63 −1.5% Decline
May 11, 2020 $121.86 $113.59 −6.8% Decline
February 4, 2020 $148.51 $157.70 6.2% Increase
November 5, 2019 $136.53 $143.22 4.9% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.85, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.85 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Zimmer Biomet Holdings, Inc. is currently trading at $132.10/share, down −1.3% for the day. The company is trading at approximately 82.0% of its 52-week high of $161.11/share. The company’s stock price is down −1.1% since the last earnings report and down −7.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 34.17 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:ZBH Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 745.27 and a forward P/E multiple of 27.13.

Zimmer Biomet Holdings, Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.35. The following table summarizes some other key fundamental ratios:

Data as of November 1, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $132.10
P/E Ratio 745.3x
P/E Ratio (Fwd) 27.1x
PEG Ratio 6.9
Total Debt / Total Capital 22.9%
Levered Free Cash Flow $899.3 million
EV / EBITDA 18.6x

Finbox

Zimmer Biomet Holdings, Inc. is a large-cap stock with a market capitalization of $27.351 billion and a total enterprise value of $34.821 billion. The company operates in the Healthcare sector and the Healthcare Equipment & Supplies industry.

Zimmer Biomet Holdings, Inc., together with its subsidiaries, designs, manufactures, and markets musculoskeletal healthcare products and solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates in four segments: Spine, less Asia Pacific; Office Based Technologies; Craniomaxillofacial and Thoracic; and Dental. The company provides orthopaedic reconstructive products, such as knee and hip replacement products; S.E.T. products, including surgical, sports medicine, biologics, foot and ankle, extremities, and trauma products; spine products comprising medical devices and surgical instruments; and face and skull reconstruction products, as well as products that fixate and stabilize the bones of the chest to facilitate healing or reconstruction after open heart surgery, trauma, or for deformities of the chest. It also offers dental products that include dental reconstructive implants, and dental prosthetic and regenerative products; and bone cement and office based technology products. The company’s products and solutions are used to treat patients suffering from disorders of, or injuries to, bones, joints, or supporting soft tissues. It serves orthopedic surgeons, neurosurgeons, oral surgeons, dentists, hospitals, stocking distributors, healthcare dealers, and other specialists, as well as agents, healthcare purchasing organizations, or buying groups. The company was formerly known as Zimmer Holdings, Inc. and changed its name to Zimmer Biomet Holdings, Inc. in June 2015. Zimmer Biomet Holdings, Inc. was founded in 1927 and is headquartered in Warsaw, Indiana.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.