uploads///EPS ESTIMATES

ZBH’s 4Q17 Earnings Results Meet Analysts’ Estimates

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Feb. 1 2018, Updated 12:00 p.m. ET

4Q17 earnings results for ZBH

Zimmer Biomet Holdings (ZBH) announced its 4Q17 and 2017 results on January 30, 2018. The company’s sales exceeded analysts’ estimates, while its adjusted EPS (earnings per share) managed to meet estimates. The company missed its earnings estimates in the previous two quarters.

On its earnings day, ZBH stock fell ~1%, and the Vanguard Value ETF (VTV) registered a fall of 1.2%. ZBH makes up ~0.19% of VTV’s total portfolio.

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4Q17 and 2017 earnings results

In 4Q17, Zimmer Biomet Holdings registered adjusted diluted EPS of $2.1, representing a YoY (year-over-year) fall of ~1.9%. The company’s adjusted operating profit in the quarter came in at $644 million, representing ~31% of its total sales. Profits fell ~1.3% compared to those registered in 4Q16. The fall in ZBH’s operating profit was the result of gross margin weakness.

In their recently reported quarters, peers Stryker (SYK), Abbott Laboratories (ABT), and Varian Medical Systems (VAR) reported adjusted diluted EPS growth of 10.1%, 13.8%, and 41.3%, respectively, on a YoY basis.

Gross margin

In 4Q17, Zimmer Biomet Holdings registered an adjusted gross margin of ~72.7% of the total sales generated by the company. The company’s gross margin was in line with its guidance.

However, this margin contracted ~1.9% on a YoY basis due to the continued impact of supply headwinds at the company’s Warsaw North Campus facility. The related incremental inventory and manufacturing costs and the impact of price declines resulted in the contraction of ZBH’s gross profit margin in 4Q17.

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