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Zimmer (ZBH) Down 3.5% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Zimmer Biomet (ZBH - Free Report) . Shares have lost about 3.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Zimmer due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Zimmer Biomet Q3 Earnings Top Estimates, 2021 View Slashed
Zimmer Biomet posted fourth-quarter 2021 adjusted earnings per share of $1.95, a penny short of the Zacks Consensus Estimate. The adjusted figure also dropped 7.6% year over year.
The quarter’s adjustments include certain amortization, restructuring, litigation, and loss on early extinguishment of debt-related costs, among others.
On a reported basis, the company registered a loss of 40 cents per share, a significant plunge from earnings of $1.59 a year ago.
Full-year adjusted earnings per share was $7.37, a 29.9% improvement over 2020. However, this too lagged the Zacks Consensus Estimate by a penny. This compares with the company’s earlier-provided adjusted earnings per share guidance range for the full year of $7.32 to $7.47.
Revenue Details
Fourth-quarter net sales of $2.04 billion declined 2.3% (down 0.8% at constant exchange rate or CER) year over year. The figure missed the Zacks Consensus Estimate by 0.6%.
For 2021, net sales were $7.84 billion, an increase of 11.6% over 2020 (up 10.3% at CER). The full-year figure missed the Zacks Consensus Estimate by 0.2%. The company’s expectation of 2021 reported revenue growth was in the range of 11.3% to 12.5%.
Segmental Details
During the fourth quarter, sales generated in the Americas totaled $1.27 billion (down 1.5% year over year at CER) while the same in EMEA (Europe, the Middle East and Africa) grossed $464 million (up 17.3% year over year at CER). Asia-Pacific registered a 17.5% plunge at CER to $308.8 million.
Segments
Sales in the Knees unit edged up 0.4% year over year at CER to $720.1 million. Hips recorded a 2.8% decline at CER to $480.7 million. Revenues in the S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) unit fell 4.3% year over year to $410.5 million.
Among the rest of the segments, Dental & Spine was down 3% at CER to $260.7 million. Other revenues rose 14.1% to $165.9 million.
CMFT (Craniomaxillofacial and Thoracic) products, previously reported in the Dental, Spine & CMFT category, are now included in the S.E.T. category. Meanwhile, the company is progressing with the planned spin-off procedure of the dental & spine arm.The transaction is expected to close on Mar 1, 2022.
Margins
Gross margin, after excluding intangible asset amortization, was 67.5%, reflecting a contraction of 142 basis points (bps) in the fourth quarter. Selling, general and administrative expenses were up 4.5% to $934 million. Research and development expenses rose 13.4% to $113.4 million. Adjusted operating margin contracted 515 bps to 16.1% during the quarter.
Cash Position
Zimmer Biomet exited 2021 with cash and cash equivalents of $478.5 million compared with $802.1 million at 2020 end. Long-term debt at the end of the year totaled $5.46 billion compared with $7.63 billion at the end of the year-ago period.
Cumulative net cash provided by operating activities at the end of 2021 was $1.49 billion compared with $1.20 billion in the year-ago period.
2022 Guidance
Zimmer Biomet provided its financial guidance for 2022.
Revenues are expected to be flat to down 4% compared with 2021.
Adjusted earnings per share for the full year is expected in the range of $6.40-$6.80.
The Zacks Consensus Estimate for 2022 adjusted earnings is pegged at $7.99 on revenues of $8.17 billion (indicating 4% growth over 2021), both ahead of the company’s projection.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -20.31% due to these changes.
VGM Scores
At this time, Zimmer has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Zimmer has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Zimmer (ZBH) Down 3.5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Zimmer Biomet (ZBH - Free Report) . Shares have lost about 3.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Zimmer due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Zimmer Biomet Q3 Earnings Top Estimates, 2021 View Slashed
Zimmer Biomet posted fourth-quarter 2021 adjusted earnings per share of $1.95, a penny short of the Zacks Consensus Estimate. The adjusted figure also dropped 7.6% year over year.
The quarter’s adjustments include certain amortization, restructuring, litigation, and loss on early extinguishment of debt-related costs, among others.
On a reported basis, the company registered a loss of 40 cents per share, a significant plunge from earnings of $1.59 a year ago.
Full-year adjusted earnings per share was $7.37, a 29.9% improvement over 2020. However, this too lagged the Zacks Consensus Estimate by a penny. This compares with the company’s earlier-provided adjusted earnings per share guidance range for the full year of $7.32 to $7.47.
Revenue Details
Fourth-quarter net sales of $2.04 billion declined 2.3% (down 0.8% at constant exchange rate or CER) year over year. The figure missed the Zacks Consensus Estimate by 0.6%.
For 2021, net sales were $7.84 billion, an increase of 11.6% over 2020 (up 10.3% at CER). The full-year figure missed the Zacks Consensus Estimate by 0.2%. The company’s expectation of 2021 reported revenue growth was in the range of 11.3% to 12.5%.
Segmental Details
During the fourth quarter, sales generated in the Americas totaled $1.27 billion (down 1.5% year over year at CER) while the same in EMEA (Europe, the Middle East and Africa) grossed $464 million (up 17.3% year over year at CER). Asia-Pacific registered a 17.5% plunge at CER to $308.8 million.
Segments
Sales in the Knees unit edged up 0.4% year over year at CER to $720.1 million. Hips recorded a 2.8% decline at CER to $480.7 million. Revenues in the S.E.T. (Sports Medicine, Extremities, Trauma, Craniomaxillofacial and Thoracic) unit fell 4.3% year over year to $410.5 million.
Among the rest of the segments, Dental & Spine was down 3% at CER to $260.7 million. Other revenues rose 14.1% to $165.9 million.
CMFT (Craniomaxillofacial and Thoracic) products, previously reported in the Dental, Spine & CMFT category, are now included in the S.E.T. category. Meanwhile, the company is progressing with the planned spin-off procedure of the dental & spine arm.The transaction is expected to close on Mar 1, 2022.
Margins
Gross margin, after excluding intangible asset amortization, was 67.5%, reflecting a contraction of 142 basis points (bps) in the fourth quarter. Selling, general and administrative expenses were up 4.5% to $934 million. Research and development expenses rose 13.4% to $113.4 million. Adjusted operating margin contracted 515 bps to 16.1% during the quarter.
Cash Position
Zimmer Biomet exited 2021 with cash and cash equivalents of $478.5 million compared with $802.1 million at 2020 end. Long-term debt at the end of the year totaled $5.46 billion compared with $7.63 billion at the end of the year-ago period.
Cumulative net cash provided by operating activities at the end of 2021 was $1.49 billion compared with $1.20 billion in the year-ago period.
2022 Guidance
Zimmer Biomet provided its financial guidance for 2022.
Revenues are expected to be flat to down 4% compared with 2021.
Adjusted earnings per share for the full year is expected in the range of $6.40-$6.80.
The Zacks Consensus Estimate for 2022 adjusted earnings is pegged at $7.99 on revenues of $8.17 billion (indicating 4% growth over 2021), both ahead of the company’s projection.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -20.31% due to these changes.
VGM Scores
At this time, Zimmer has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Zimmer has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.