Zimmer Biomet Stock Near Crucial Support – Buy Signal?

ZBH: Zimmer Biomet logo
ZBH
Zimmer Biomet

Zimmer Biomet (ZBH) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($83.17 – $91.93), levels from which it has bounced meaningfully before. In the last 10 years, Zimmer Biomet stock received buying interest at this level 10 times and subsequently went on to generate 29.8% in average peak returns.

  Peak Return Days to Peak Return
4/8/2016 22.9% 465
11/7/2017 18.1% 86
4/3/2018 23.2% 178
1/17/2019 22.0% 63
5/28/2019 43.8% 262
4/13/2020 27.2% 53
6/25/2020 56.0% 308
7/14/2022 15.3% 29
9/6/2022 39.8% 297
10/12/2023 29.6% 167

But is the price action enough alone? It certainly helps if the fundamentals check out. For ZBH Read Buy or Sell ZBH Stock to see how convincing this buy opportunity might be.

Individual stocks can soar or tank but one thing matters: staying invested. High Quality Portfolio helps you do that.

Here are some quick data points for Zimmer Biomet that should help decision:

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  • Revenue Growth: 5.5% LTM and 5.1% last 3 year average.
  • Cash Generation: Nearly 17.6% free cash flow margin and 18.7% operating margin LTM.
  • Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for ZBH was 4.1%.
  • Valuation: ZBH stock trades at a PE multiple of 21.5

For quick background, Zimmer Biomet provides orthopaedic reconstructive, sports medicine, biologics, trauma, and dental implant products across global markets in the musculoskeletal healthcare sector.

  ZBH S&P Median
Sector Health Care
Industry Health Care Equipment
PE Ratio 21.5 23.8

   
LTM* Revenue Growth 5.5% 5.6%
3Y Average Annual Revenue Growth 5.1% 5.3%
Min Annual Revenue Growth Last 3Y 4.1% -0.0%

   
LTM* Operating Margin 18.7% 18.8%
3Y Average Operating Margin 19.1% 18.2%
LTM* Free Cash Flow Margin 17.6% 13.4%

*LTM: Last Twelve Months

What Is Stock-Specific Risk If The Market Crashes?

ZBH isn’t immune to big drops. It fell 65% in the Global Financial Crisis and nearly 50% during the Covid pandemic. The 2018 correction and inflation shock each knocked it down at least 26% and 41%, respectively. So even with solid fundamentals, this stock can take a serious hit when markets turn south. Risk is real, no matter how strong the setup looks.

But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read ZBH Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.