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Zimmer Biomet (ZBH) Q3 Earnings: What's in the Cards?
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Orthopedic reconstructive products manufacturer, Zimmer Biomet Holdings, Inc. (ZBH - Free Report) is slated to report third-quarter 2016 financial numbers on Oct 31, before the opening bell.
Last quarter, the company posted a positive earnings surprise of 3.06%. The four-quarter trailing average beat is pegged at 3.74%. Let’s see how things are shaping up prior to this announcement.
Factors at Play
Post dismal dental sales, primarily due to supply disruption linked with a voluntary field action in response to a packaging issue, management is concerned about the looming headwinds which may again mar Zimmer Biomet’s performance. Management expects rising operating expenses to affect the third quarter due to the ongoing acquisitions and planned strategic initiatives. Moreover, hurdles in the form of intensified competition, persisting pricing pressure and currency headwinds continue to raise concern. The huge margin contraction also poses a major threat.
In spite of these, Zimmer Biomet posted second-quarter total revenue of $1.934 billion, an increase of 4.5% year over year at constant currency driven by strong U.S. knee business. We expect this top-line trend to be repeated in the yet to be reported third quarter as well driven by.
Several recent product innovations including Vanguard Individualized Design (ID) are expected to drive the company’s top line in the yet-to-be-reported quarter. In order to expand its ankle and foot portfolio, the company recently announced a global distribution agreement with Nextremity solutions. We expect this strategic acquisition to prove accretive to the company’s growth in the near term.
We also look forward to the synergies from the colossal $13.35 billion acquisition of Biomet. Also, the $1 billion LDR buyout bolsters the company’s presence in the $10 billion global spine market by expanding its portfolio of innovative solutions and strengthening in the fast growing cervical disc replacement market. We expect the benefits of the buyouts to get reflected in the forthcoming quarters. The company has also strengthened its musculoskeletal diagnostic segment with the acquisition of CD Diagnostics in the third quarter.
Earnings Whispers
Our proven model does not conclusively show that Zimmer Biomet is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Zimmer Biomet’s earnings ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.79.
Zacks Rank: Zimmer Biomet has a Zacks Rank #4. Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few companies that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Glaukos Corporation (GKOS - Free Report) has an earnings ESP of +200% and a Zacks Rank #1.
Invuity, Inc. has an earnings ESP of +1.61% and a Zacks Rank #2.
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Zimmer Biomet (ZBH) Q3 Earnings: What's in the Cards?
Orthopedic reconstructive products manufacturer, Zimmer Biomet Holdings, Inc. (ZBH - Free Report) is slated to report third-quarter 2016 financial numbers on Oct 31, before the opening bell.
Last quarter, the company posted a positive earnings surprise of 3.06%. The four-quarter trailing average beat is pegged at 3.74%. Let’s see how things are shaping up prior to this announcement.
Factors at Play
Post dismal dental sales, primarily due to supply disruption linked with a voluntary field action in response to a packaging issue, management is concerned about the looming headwinds which may again mar Zimmer Biomet’s performance. Management expects rising operating expenses to affect the third quarter due to the ongoing acquisitions and planned strategic initiatives. Moreover, hurdles in the form of intensified competition, persisting pricing pressure and currency headwinds continue to raise concern. The huge margin contraction also poses a major threat.
ZIMMER BIOMET Price and EPS Surprise
ZIMMER BIOMET Price and EPS Surprise | ZIMMER BIOMET Quote
In spite of these, Zimmer Biomet posted second-quarter total revenue of $1.934 billion, an increase of 4.5% year over year at constant currency driven by strong U.S. knee business. We expect this top-line trend to be repeated in the yet to be reported third quarter as well driven by.
Several recent product innovations including Vanguard Individualized Design (ID) are expected to drive the company’s top line in the yet-to-be-reported quarter. In order to expand its ankle and foot portfolio, the company recently announced a global distribution agreement with Nextremity solutions. We expect this strategic acquisition to prove accretive to the company’s growth in the near term.
We also look forward to the synergies from the colossal $13.35 billion acquisition of Biomet. Also, the $1 billion LDR buyout bolsters the company’s presence in the $10 billion global spine market by expanding its portfolio of innovative solutions and strengthening in the fast growing cervical disc replacement market. We expect the benefits of the buyouts to get reflected in the forthcoming quarters. The company has also strengthened its musculoskeletal diagnostic segment with the acquisition of CD Diagnostics in the third quarter.
Earnings Whispers
Our proven model does not conclusively show that Zimmer Biomet is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Zimmer Biomet’s earnings ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.79.
Zacks Rank: Zimmer Biomet has a Zacks Rank #4. Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few companies that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Glaukos Corporation (GKOS - Free Report) has an earnings ESP of +200% and a Zacks Rank #1.
Penumbra, Inc. (PEN - Free Report) has an earnings ESP of +45.46% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Invuity, Inc. has an earnings ESP of +1.61% and a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>