Zimmer Biomet Stock Delivers Strong Cash Yield – Upside Ahead?

Zimmer Biomet (ZBH) could be an interesting pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation

Zimmer Biomet’s stock performance over the past year reflects robust U.S. organic revenue growth, notably 5.6% in Q3 2025, fueled by new product adoption, including its “Magnificent Seven,” and strong robotic system placements. Strategic acquisitions like Monogram Technologies and Paragon 28 also bolster its diversified portfolio. However, over the past 30 days, a slight Q3 2025 revenue miss of analyst estimates and revised 2025 full-year organic constant currency revenue guidance (3.5-4% from 3.5-4.5%) due to international market weakness and soft restorative therapies, pressured the shares.

Let’s talk numbers:

• Cash Yield: Not many stocks offer free cash flow yield of 8.0%, but Zimmer Biomet stock does
• Fundamentals: Last 12 month revenue growth of 5.5% and operating margin of 18.7% show reasonable fundamentals
• Valuation: ZBH stock currently trading at 32% below 2Y high, 15% below 1M high, and at a PS lower than 3Y average.

Free Cash Flow Yield refers to free cash flow per share / stock price. Why it matters? If a company produces high amount of cash per share, it can be used to fuel additional revenue growth, or simply paid through dividends or buybacks to shareholders. For quick background, Zimmer Biomet provides orthopaedic reconstructive, sports medicine, biologics, trauma, and dental implant products across global markets in the musculoskeletal healthcare sector.

Portfolio beats stock-picking every time. Consider what could long-term performance for your portfolio be if you combined 10% commodities, 10% gold, and 2% crypto with equities.

But do these numbers tell the full story? Read Buy or Sell ZBH Stock to see if Zimmer Biomet still has an edge that holds up under the hood.

That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure

The Point? The Market Can Notice, And Reward

The below statistics are from high FCF yield selection strategy between 12/31/2016 and 6/30/2025. The stats are calculated based on selections made monthly, and assuming that a stock once picked, can not be re-picked for next 180 days.

• Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
• Win rate (percentage of picks returning positive) of about 74% for 12-month period
• Not over dependent on market crashes. During non-crash periods as well, this strategy has 12-month average return of nearly 18% with 70% win rate.

But Consider The Risk

That said, ZBH isn’t immune to big drops. It fell about 65% in the Global Financial Crisis and nearly 50% during the Covid pandemic. The 2018 correction and inflation shock hit it too, with declines around 26% and 41%, respectively. Even solid companies like ZBH can face steep declines when market turmoil hits. Risk is always there, no matter how strong the fundamentals look.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – 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.