Critical Survey: Tandem Diabetes Care (TNDM) vs. Zimmer Biomet (ZBH)

Tandem Diabetes Care (NASDAQ: TNDM) and Zimmer Biomet (NYSE:ZBH) are both medical companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, profitability, valuation and risk.

Insider & Institutional Ownership

86.2% of Zimmer Biomet shares are held by institutional investors. 20.9% of Tandem Diabetes Care shares are held by insiders. Comparatively, 1.1% of Zimmer Biomet shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Tandem Diabetes Care and Zimmer Biomet’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tandem Diabetes Care $84.25 million 0.31 -$83.44 million ($19.79) -0.13
Zimmer Biomet $7.68 billion 3.04 $305.90 million $3.21 35.98

Zimmer Biomet has higher revenue and earnings than Tandem Diabetes Care. Tandem Diabetes Care is trading at a lower price-to-earnings ratio than Zimmer Biomet, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Tandem Diabetes Care has a beta of 0.17, indicating that its stock price is 83% less volatile than the S&P 500. Comparatively, Zimmer Biomet has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.

Dividends

Zimmer Biomet pays an annual dividend of $0.96 per share and has a dividend yield of 0.8%. Tandem Diabetes Care does not pay a dividend. Zimmer Biomet pays out 29.9% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Tandem Diabetes Care and Zimmer Biomet, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tandem Diabetes Care 0 4 2 0 2.33
Zimmer Biomet 1 6 14 1 2.68

Tandem Diabetes Care currently has a consensus price target of $13.00, suggesting a potential upside of 403.88%. Zimmer Biomet has a consensus price target of $135.40, suggesting a potential upside of 17.24%. Given Tandem Diabetes Care’s higher possible upside, equities research analysts clearly believe Tandem Diabetes Care is more favorable than Zimmer Biomet.

Profitability

This table compares Tandem Diabetes Care and Zimmer Biomet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tandem Diabetes Care -79.45% -1,177.11% -74.29%
Zimmer Biomet 8.36% 16.29% 6.17%

Summary

Zimmer Biomet beats Tandem Diabetes Care on 13 of the 16 factors compared between the two stocks.

About Tandem Diabetes Care

Tandem Diabetes Care, Inc. is a medical device company. The Company is engaged in designing, developing and commercializing products for people with insulin-dependent diabetes. The Company manufactures and sells three insulin pump products, which include t:slim Insulin Delivery System (t:slim), t:flex Insulin Delivery System (t:flex) and t:slim G4 Insulin Delivery System (t:slim G4). Its technology platform features Micro-Delivery Technology, a miniaturized pumping mechanism, which draws insulin from a flexible bag within the pump’s cartridge rather than relying on a syringe and plunger mechanism. It also features a software, which is a vivid color touch screen and a micro- universal serial bus (USB) connection that supports both a rechargeable battery and uploads to t:connect Diabetes Management Application (t:connect), its custom cloud-based data management application that provides display therapy management data from the pump and supported blood glucose meters.

About Zimmer Biomet

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.

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