Zimmer Holdings Catches Analysts Sleeping Again

Seth Jayson, The Motley Fool
Updated

Zimmer Holdings (NYS: ZMH) reported earnings on Jan. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Zimmer Holdings met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew slightly, and GAAP earnings per share expanded significantly.

Gross margins dropped, operating margins dropped, net margins grew.

Revenue details
Zimmer Holdings booked revenue of $1.17 billion. The 26 analysts polled by S&P Capital IQ wanted to see sales of $1.16 billion. Sales were 2.9% higher than the prior-year quarter's $1.13 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $1.36. The 29 earnings estimates compiled by S&P Capital IQ predicted $1.34 per share on the same basis. GAAP EPS of $1.01 for Q4 were 392% higher than the prior-year quarter's $0.18 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 74.0%, 200 basis points worse than the prior-year quarter. Operating margin was 19.7%, 1,100 basis points worse than the prior-year quarter. Net margin was 13.4%, 1,030 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.14 billion. On the bottom line, the average EPS estimate is $1.30.

Next year's average estimate for revenue is $4.54 billion. The average EPS estimate is $5.25.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 609 members out of 639 rating the stock outperform, and 30 members rating it underperform. Among 242 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 235 give Zimmer Holdings a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Zimmer Holdings is outperform, with an average price target of $63.52.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Zimmer Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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