What Does Zimmer Biomet Holdings, Inc.'s (NYSE:ZBH) Share Price Indicate?

Zimmer Biomet Holdings, Inc. (NYSE:ZBH) saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Zimmer Biomet Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Zimmer Biomet Holdings

What Is Zimmer Biomet Holdings Worth?

According to our valuation model, Zimmer Biomet Holdings seems to be fairly priced at around 1.3% below our intrinsic value, which means if you buy Zimmer Biomet Holdings today, you’d be paying a fair price for it. And if you believe that the stock is really worth $124.35, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? 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 an opportunity to buy later on. 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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 29% over the next couple of years, the future seems bright for Zimmer Biomet Holdings. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in ZBH’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on ZBH, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Zimmer Biomet Holdings at this point in time. Every company has risks, and we've spotted 1 warning sign for Zimmer Biomet Holdings you should know about.

If you are no longer interested in Zimmer Biomet Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.