We Ran A Stock Scan For Earnings Growth And Zimmer Biomet Holdings (NYSE:ZBH) Passed With Ease

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Zimmer Biomet Holdings (NYSE:ZBH). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Zimmer Biomet Holdings with the means to add long-term value to shareholders.

View our latest analysis for Zimmer Biomet Holdings

How Fast Is Zimmer Biomet Holdings Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, Zimmer Biomet Holdings has grown EPS by 5.5% per year. While that sort of growth rate isn't anything to write home about, it does show the business is growing.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note Zimmer Biomet Holdings achieved similar EBIT margins to last year, revenue grew by a solid 3.2% to US$7.1b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

Fortunately, we've got access to analyst forecasts of Zimmer Biomet Holdings' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Zimmer Biomet Holdings Insiders Aligned With All Shareholders?

Since Zimmer Biomet Holdings has a market capitalisation of US$30b, we wouldn't expect insiders to hold a large percentage of shares. But we do take comfort from the fact that they are investors in the company. Indeed, they hold US$30m worth of its stock. This considerable investment should help drive long-term value in the business. Even though that's only about 0.1% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Does Zimmer Biomet Holdings Deserve A Spot On Your Watchlist?

As previously touched on, Zimmer Biomet Holdings is a growing business, which is encouraging. If that's not enough on its own, there is also the rather notable levels of insider ownership. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. Still, you should learn about the 2 warning signs we've spotted with Zimmer Biomet Holdings.

Although Zimmer Biomet Holdings certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.