Zimmer Biomet Holdings (NYSE: ZBH) and West Pharmaceutical Services (NYSE:WST) are both mid-cap medical companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, analyst recommendations, profitability, institutional ownership, dividends and valuation.
This table compares Zimmer Biomet Holdings and West Pharmaceutical Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Zimmer Biomet Holdings||9.12%||16.70%||6.18%|
|West Pharmaceutical Services||11.42%||14.02%||9.32%|
Insider and Institutional Ownership
85.5% of Zimmer Biomet Holdings shares are owned by institutional investors. Comparatively, 91.3% of West Pharmaceutical Services shares are owned by institutional investors. 1.1% of Zimmer Biomet Holdings shares are owned by insiders. Comparatively, 1.9% of West Pharmaceutical Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Zimmer Biomet Holdings pays an annual dividend of $0.96 per share and has a dividend yield of 0.8%. West Pharmaceutical Services pays an annual dividend of $0.52 per share and has a dividend yield of 0.5%. Zimmer Biomet Holdings pays out 27.6% of its earnings in the form of a dividend. West Pharmaceutical Services pays out 22.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Zimmer Biomet Holdings has increased its dividend for 24 consecutive years. Zimmer Biomet Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Zimmer Biomet Holdings has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500. Comparatively, West Pharmaceutical Services has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.
This is a breakdown of recent ratings and price targets for Zimmer Biomet Holdings and West Pharmaceutical Services, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Zimmer Biomet Holdings||1||6||13||1||2.67|
|West Pharmaceutical Services||0||0||3||0||3.00|
Zimmer Biomet Holdings presently has a consensus target price of $138.68, indicating a potential upside of 20.10%. West Pharmaceutical Services has a consensus target price of $93.78, indicating a potential downside of 2.23%. Given Zimmer Biomet Holdings’ higher probable upside, equities research analysts plainly believe Zimmer Biomet Holdings is more favorable than West Pharmaceutical Services.
Valuation and Earnings
This table compares Zimmer Biomet Holdings and West Pharmaceutical Services’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Zimmer Biomet Holdings||$7.78 billion||3.00||$2.80 billion||$3.48||33.18|
|West Pharmaceutical Services||$1.54 billion||4.61||$317.90 million||$2.34||40.99|
Zimmer Biomet Holdings has higher revenue and earnings than West Pharmaceutical Services. Zimmer Biomet Holdings is trading at a lower price-to-earnings ratio than West Pharmaceutical Services, indicating that it is currently the more affordable of the two stocks.
Zimmer Biomet Holdings beats West Pharmaceutical Services on 10 of the 18 factors compared between the two stocks.
Zimmer Biomet Holdings Company Profile
Zimmer Biomet Holdings, Inc. is engaged in designing, manufacturing and marketing of orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; office-based technologies; spine, craniomaxillofacial and thoracic products; dental implants, and related surgical products. The Company’s products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. The Company manages its operations through three geographic operating segments: the Americas, consisting principally of the United States and other North, Central and South American markets; EMEA, consisting principally of Europe and the Middle East and African markets, and Asia Pacific, consisting primarily of Japan and other Asian and Pacific markets. The Company’s product category segments include Americas Spine, Office Based Technologies, Craniomaxillofacial and Thoracic (CMF), and Dental.
West Pharmaceutical Services Company Profile
West Pharmaceutical Services, Inc. is a manufacturer of packaging components and delivery systems for injectable drugs and healthcare products. The Company’s products include vial containment solutions, prefillable systems, self-injection platforms, cartridge systems and components, reconstitution and transfer systems, intradermal delivery solutions, specialty components, and contract manufacturing and analytical services. The Company’s segments include Proprietary Products and Contract-Manufactured Products. The Proprietary Products segment develops commercial and operational strategies across its global network, with specific emphasis on product offerings to biologic, generic and pharmaceutical drug customers. The Contract-Manufactured Products segment serves as an integrated business focused on the design, manufacture and automated assembly of various devices, primarily for pharmaceutical, diagnostic and medical device customers.
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