domonic zarrini zimmer holdings, inc. (zmh)-nyse 112.09

Domonic Zarrini

Zimmer Holdings, Inc. (ZMH)-NYSE 112.09    

Screening ProcessFocus on Domestic Stocks

• Industry Classification: • Healthcare Equipment and Services (primary)

• 99601• Exchanges (All Listing):

• Major US Exchanges • 279

• Forward P/E:• Capital IQ (NTM) Greater than 17

• 126• LT EPS Growth Rate:

• Capital IQ (Latest) Greater than 7• 115

• EPS Surprise – Capital IQ (FY)• Greater than 0

• 58

Company Overview• Zimmer Holdings, Inc. designs, develops, manufactures, and

markets orthopaedic and dental reconstructive implants, spinal implants, trauma products and related surgical products. The Company also provides other healthcare related services.

• Ticker: ZMH• Sector: Health Care• Industry: Medical Equipment & Devices• Sub-Industry: Medical Devices• Headquarters: Warsaw, IN• Employees: 8,500• CEO: David Dvorak• Market Cap: 19.02B

Revenue Drivers

• Reconstructive Implants• Competitive advantage lies in hip & knee

reconstructive implants due to acquisition of Centerpulse

• Sell contracts primarily to hospitals, clinics, private practices, orthopedic surgeons

Recent Trends

• Decreased debt by over 3%, bringing it down to just over 20%

• Stryker increased debt from 17.1% to 31.5% in a span of 2 years

• Zimmer is not taking advantage of cheap debt in the market

• Increased use of off-balance sheet financing by way of lease agreements

• Grew long term capital leases by 6%

Sector Overview

S&P 500, Sector, & Subsector Chart

Geographical Distribution and Product Segments

SWOT AnalysisStrengths

Strong manufacturing and commercial capabilities

Extensive portfolio of orthopedic reconstructive implants

WeaknessesWeak presence in emerging Asian

markets may restrict growth

OpportunitiesStrategic acquisitions and joint venturesFavorable demographic trends in the US

likely to boost demand for the company’s medical devices

ThreatsGroup purchasing organizations’ cost

containment measuresInadequate levels of reimbursement

may affect the company’s sale growth

Earnings and PE Growth

Earnings Analysis

Balance Sheet Analysis

Earnings Surprise

EPS Projections

Altman-Z Score

Discounted Cash Flow

EPS Growth

Competitor/Industry Comparison

Recommendation

Undervalued: BUY