The 10-second takeaway
For the quarter ended June 30 (Q2), Zimmer Holdings beat slightly on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share increased. GAAP earnings per share contracted significantly.
Margins shrank across the board.
Zimmer Holdings recorded revenue of $1.17 billion. The 26 analysts polled by S&P Capital IQ expected a top line of $1.15 billion on the same basis. GAAP reported sales were the same as the prior-year quarter's.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $1.43. The 29 earnings estimates compiled by S&P Capital IQ forecast $1.44 per share. Non-GAAP EPS of $1.43 for Q2 were 6.7% higher than the prior-year quarter's $1.34 per share. GAAP EPS of $0.89 for Q2 were 27% lower than the prior-year quarter's $1.22 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 72.3%, 270 basis points worse than the prior-year quarter. Operating margin was 24.5%, 520 basis points worse than the prior-year quarter. Net margin was 13.0%, 610 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $1.06 billion. On the bottom line, the average EPS estimate is $1.27.
Next year's average estimate for revenue is $4.56 billion. The average EPS estimate is $5.75.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 582 members out of 610 rating the stock outperform, and 28 members rating it underperform. Among 217 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 208 give Zimmer Holdings a green thumbs-up, and nine 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 $80.73.
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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 of Motley 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 may not 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.