Zimmer Biomet Holdings, Inc. (NYSE:ZBH) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$179 at one point, and dropping to the lows of US$158. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Zimmer Biomet Holdings' current trading price of US$164 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Zimmer Biomet Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Zimmer Biomet Holdings worth?
Great news for investors – Zimmer Biomet Holdings is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $271.30, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Zimmer Biomet Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Zimmer Biomet Holdings look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Zimmer Biomet Holdings' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since ZBH is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on ZBH for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ZBH. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
If you want to dive deeper into Zimmer Biomet Holdings, you'd also look into what risks it is currently facing. Our analysis shows 2 warning signs for Zimmer Biomet Holdings (1 is potentially serious!) and we strongly recommend you look at them before investing.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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Zimmer Biomet Holdings
Zimmer Biomet Holdings, Inc., together with its subsidiaries, operates in the musculoskeletal healthcare business in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
Adequate balance sheet with moderate growth potential.