Analyzing Zimmer Biomet (ZBH) & Invacare (IVC)

Zimmer Biomet (NYSE: ZBH) and Invacare (NYSE:IVC) are both medical companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, dividends, risk and institutional ownership.

Valuation & Earnings

This table compares Zimmer Biomet and Invacare’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zimmer Biomet $7.82 billion 2.97 $1.81 billion $8.03 14.24
Invacare $966.50 million 0.69 -$76.54 million ($1.93) -8.76

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

Dividends

Zimmer Biomet pays an annual dividend of $0.96 per share and has a dividend yield of 0.8%. Invacare pays an annual dividend of $0.05 per share and has a dividend yield of 0.3%. Zimmer Biomet pays out 12.0% of its earnings in the form of a dividend. Invacare pays out -2.6% 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 has raised its dividend for 2 consecutive years. Zimmer Biomet is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Zimmer Biomet 21.81% 14.36% 6.02%
Invacare -7.60% -13.88% -5.63%

Volatility & Risk

Zimmer Biomet has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, Invacare has a beta of 2.52, indicating that its stock price is 152% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Zimmer Biomet and Invacare, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zimmer Biomet 0 6 17 1 2.79
Invacare 0 2 1 0 2.33

Zimmer Biomet presently has a consensus target price of $137.71, suggesting a potential upside of 20.47%. Invacare has a consensus target price of $17.50, suggesting a potential upside of 3.55%. Given Zimmer Biomet’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Zimmer Biomet is more favorable than Invacare.

Insider & Institutional Ownership

87.4% of Zimmer Biomet shares are held by institutional investors. 0.7% of Zimmer Biomet shares are held by insiders. Comparatively, 2.1% of Invacare shares are held 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.

Summary

Zimmer Biomet beats Invacare on 14 of the 17 factors compared between the two stocks.

Zimmer Biomet Company Profile

Zimmer Biomet Holdings, Inc., together with its subsidiaries, designs, manufactures, and markets musculoskeletal healthcare products and solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates through four segments: Spine, less Asia Pacific; Office Based Technologies; Craniomaxillofacial and Thoracic; and Dental. The company provides orthopaedic reconstructive products, such as knee and hip replacement products; S.E.T. products, including surgical, sports medicine, biologics, foot and ankle, extremities, and trauma products; spine products comprising medical devices and surgical instruments; and face and skull reconstruction products, as well as products that fixate and stabilize the bones of the chest to facilitate healing or reconstruction after open heart surgery, trauma, or for deformities of the chest. It also offers dental products that include dental reconstructive implants, and dental prosthetic and regenerative products; and bone cement and spinal fusion stimulators. The company's products and solutions are used to treat patients suffering from disorders of, or injuries to, bones, joints, or supporting soft tissues. It serves orthopaedic surgeons, neurosurgeons, oral surgeons, dentists, hospitals, stocking distributors, healthcare dealers, and other specialists, as well as agents, healthcare purchasing organizations, or buying groups. The company was formerly known as Zimmer Holdings, Inc. and changed its name to Zimmer Biomet Holdings, Inc. in June 2015. Zimmer Biomet Holdings, Inc. was founded in 1927 and is headquartered in Warsaw, Indiana.

Invacare Company Profile

Invacare Corporation, together with its subsidiaries, designs, manufactures, distributes, and exports medical equipment for use in home health care, retail, and extended care markets worldwide. The company operates through four segments: North America/Home Medical Equipment, Institutional Products Group, Europe, and the Asia/Pacific. It offers mobility and seating products, such as power wheelchairs under the Invacare TDX brand; custom manual wheelchairs under the Invacare, Invacare Top End, and Küschall brand names; and seating and positioning products. The company also provides lifestyle products, including pressure relieving overlays and mattress replacement systems under the Invacare Softform and microAIR brands; safe resident handling products; residential care and home beds and bed accessories, and manual wheelchairs under the Invacare brand name; and personal care products. In addition, the company offers respiratory therapy products comprising stationary oxygen concentrators under the Perfecto2, Perfecto2 V, and Platinum brands; Invacare HomeFill oxygen systems; and Invacare SOLO2 and XPO2 transportable oxygen concentrators. Further, it sells and distributes healthcare furnishings consisting of long-term care beds, case goods, safe patient handling equipment, and other equipment and accessories for long-term care customers. It sells its products primarily to home medical equipment providers through retail and e-commerce channels, as well as to residential care operators, distributors, and government health service customers through its sales force, independent manufacturers' representatives, and distributors. Invacare Corporation was founded in 1885 and is headquartered in Elyria, Ohio.

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