Zimmer Biomet Holdings, Inc. (ZBH) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: Zimmer Biomet Holdings, Inc.

Updated on October 2, 2026 · accounts published on August 5, 2026

Reading of October 2, 2026: A cash-generative business with rising margins

Zimmer Biomet trades at a P/E of 21.4 over the last 12 months, 24 % below its sector median of 28.3, with a 13 % free cash flow yield.

• Is Zimmer Biomet expensive or cheap? Its P/E of 21.4 sits 24 % below the sector median of 28.3 and is less than half its eight-year average of 44.9.
• How is the business doing? The operating margin of 16 % over the last 12 months beats its 12 % average for fiscal 2014-2025, with revenue up 7 %.
• Does Zimmer Biomet invest enough in R&D and turn profit into cash? Free cash flow was 209 % of net income in fiscal 2025, but R&D at 5.6 % of revenue falls well short of the 15 % bar.
• How strong is the balance sheet? Net debt was 3.1× EBITDA in fiscal 2025, above the 2.5× healthy ceiling for healthcare, and equals 41 % of the share price.
• What to expect from the next earnings? On November 4, 2026, analysts expect EPS of $1.89; Zimmer Biomet has beaten estimates in 7 of the last 8 quarters.

Is Zimmer Biomet expensive or cheap?

Over the last 12 months Zimmer Biomet trades at a P/E of 21.4. That is 24 % below the 28.3 median across 209 healthcare companies and far under its eight-year average of 44.9. Cash makes the case more strongly: the free cash flow yield is 13.2 %, against an earnings yield of 5.0 %, so the business produces much more cash than its accounting profit suggests. An EV/EBITDA of 12.4× and a P/B of 1.3× point the same way. The market has not rewarded this. The stock is down 9 % over 12 months and trades 14 % below its 52-week high of $103.98.

How is the business doing?

Over the last 12 months revenue rose 7 % year over year, but EPS fell 20 %, so the growth has not reached the bottom line. Margins look better. The operating margin of 16 % is well above the 12 % average for fiscal 2014-2025, though slightly below the fiscal 2025 level. Return on capital is the weak spot. ROIC of 5.5 % trails the sector median of 6.1 % and has not topped 10 % in any of the last ten fiscal years. ROE of 6.4 % confirms that the company earns modest returns on the capital it employs.

Does Zimmer Biomet invest enough in R&D and turn profit into cash?

In healthcare the research pipeline is the invisible asset. Patents that expire take revenue with them, so investors look at innovation and cash conversion more than at headline earnings. Zimmer Biomet passes one test and fails the other. R&D spending was 5.6 % of revenue in fiscal 2025, well below the 15 % considered healthy for the sector, and its 62 % gross margin misses the 70 % mark typical of branded pharma. Cash conversion is the strength: free cash flow equalled 209 % of net income in fiscal 2025, more than double the 90 % threshold. Reported profit understates the cash this business generates.

How strong is the balance sheet?

Debt is the main constraint. In fiscal 2025 net debt was $36.46 per share, equal to 41 % of the current share price, and 3.1× EBITDA against the 2.5× ceiling considered healthy in healthcare. Short-term liquidity is sound, with a current ratio of 1.69 over the last 12 months, and debt to equity of 0.59 is moderate. An Altman Z of 2.4 puts the company in the grey zone, which calls for monitoring rather than alarm, and a Piotroski score of 6 out of 9 is acceptable. The dividend yields 1.1 % and took only 27 % of fiscal 2025 earnings.

What to expect from the next earnings?

Zimmer Biomet reports on November 4, 2026, and analysts expect EPS of $1.89 for the quarter. That is below the $2.07 reported on August 5, 2026, which beat the $2.01 estimate by 3 %. The track record is consistent: the company has beaten EPS estimates in 7 of the last 8 quarters. Over the last 17 days the 16 analysts behind the 2026 EPS consensus have held it at $8.53, and revenue estimates have barely changed either. Sentiment is lukewarm: of 42 analysts, 17 recommend buying, 22 holding and 3 selling.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.