Zimmer Holding Steady: Fool by Numbers
By Ryan Fuhrmann, CFA
April 26, 2007
Recommended (11)
On April 25, after the market closed, orthopedic designer, developer, and manufacturer Zimmer Holdings (NYSE: ZMH) released results for the first quarter ended March 31. Here are the quick and dirty details.
- Net sales advanced 10.4%, ahead of initial management and analyst projections.
- Higher margins and share buybacks helped diluted earnings improve 19.5%.
- For the full year, management upped revenue and diluted earnings guidance to $3.885 billion and $4.20, respectively, for a forward P/E of nearly 23.
- Zimmer has the highest rating -- five stars -- in Motley Fool CAPS, while rivals Biomet (Nasdaq: BMET), Stryker (NYSE: SYK), and Smith & Nephew (NYSE: SNN) carry still-healthy four-star ratings. Health-care giant Johnson & Johnson (NYSE: JNJ) also has a sizeable implant and device business, and a five-star rating to boot.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Avg. Est.
|
Q1 2007
|
Q1 2006
|
Change
|
|
Sales
|
$934
|
$950
|
$860
|
10.4%
|
|
Net Profit
|
--
|
$233
|
$206
|
13.5%
|
|
EPS
|
$0.93
|
$0.98
|
$0.82
|
19.5%
|
|
Diluted Shares
|
--
|
239
|
250
|
(4.4%)
|
Get back to basics with a look at the income statement.
Margin Checkup
|
Q1 2007
|
Q1 2006
|
Change*
|
|
Gross Margin
|
78.28%
|
77.99%
|
0.29
|
|
Operating Margin
|
34.43%
|
33.76%
|
0.67
|
|
Net Margin
|
24.56%
|
23.90%
|
0.66
|
*Expressed in percentage points
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
Q1 2007
|
Q1 2006
|
Change
|
|
Cash + ST Invest.
|
$328
|
$416
|
(21.0%)
|
|
Accounts Rec.
|
$693
|
$592
|
17.0%
|
|
Inventory
|
$659
|
$600
|
9.9%
|
|
Liabilities
|
Q1 2007
|
Q1 2006
|
Change
|
|
Long-Term Debt
|
$100
|
$82
|
22.7%
|
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q1 2007
|
Q1 2006
|
Change
|
|
Cash From Ops.
|
$213
|
$203
|
5.2%
|
|
Capital Expenditures
|
$53
|
$38
|
41.1%
|
|
Free Cash Flow
|
$160
|
$165
|
(3.0%)
|
Free cash flow is a Fool's best friend.
Related Foolishness:
Johnson & Johnson is an
Income Investor
recommendation. To see what other dividend-paying stocks James Early is recommending, check out Income Investor free for 30 days.
Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.
Fool contributor Ryan Fuhrmann is long shares of Biomet and Johnson & Johnson, but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
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