Zimmer Biomet Holdings, Inc. (NYSE:ZBH) Earnings Preview: A Look into the Future

• Analysts expect Zimmer Biomet Holdings, Inc. (NYSE:ZBH) to report an earnings per share (EPS) of $2.30 for the fourth quarter of 2024, indicating a 4.6% increase year-over-year.
• The company's revenue is projected to reach $2.01 billion, marking a 3.7% growth from the previous year.
• Despite a slight downward revision in EPS estimates, Zimmer Biomet has historically exceeded earnings estimates in three of the last four quarters.

Zimmer Biomet Holdings, Inc. (NYSE:ZBH) is a prominent player in the medical device industry, specializing in musculoskeletal healthcare. The company designs, manufactures, and markets orthopedic reconstructive products, including knee and hip implants, as well as other surgical products. Zimmer Biomet competes with other major companies like Stryker Corporation and Johnson & Johnson in the orthopedic market.

As Zimmer Biomet prepares to release its fourth-quarter 2024 earnings on February 6, analysts expect an earnings per share (EPS) of $2.30. This represents a 4.6% increase from the same period last year. The company's revenue is projected to reach $2.01 billion, marking a 3.7% year-over-year growth. These figures suggest a positive trend in the company's financial performance.

Despite the positive outlook, the consensus EPS estimate for the quarter has been slightly revised downward by 0.1% over the past 30 days. Such revisions can influence investor behavior and impact the short-term price performance of the stock, as highlighted by empirical studies. Investors often react to these changes, which can lead to fluctuations in stock prices.

Zimmer Biomet's Hips business is expected to have contributed to the company's growth, driven by its navigation solutions in direct anterior stems and surgical impactors. In the previous quarter, the company reported earnings of $1.74, which fell short of the Zacks Consensus Estimate by 0.57%. However, Zimmer Biomet has exceeded earnings estimates in three of the last four quarters, with an average earnings surprise of 1.76%.

The company's financial metrics provide further insight into its valuation. Zimmer Biomet has a price-to-earnings (P/E) ratio of approximately 20.13, indicating the amount investors are willing to pay for each dollar of earnings. The price-to-sales ratio is about 2.83, while the enterprise value to sales ratio is around 3.62. These figures suggest that the company is valued at over three times its sales when considering its debt and cash. Additionally, the debt-to-equity ratio of approximately 0.53 indicates a moderate level of debt compared to equity, and a current ratio of around 1.36 suggests a reasonable level of liquidity to cover short-term liabilities.