Zimmer Biomet Holdings (NYSE: ZBH) and Hill-Rom Holdings (NYSE:HRC) are both mid-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, valuation, institutional ownership, analyst recommendations, earnings, risk and dividends.

Volatility and Risk

Zimmer Biomet Holdings has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500. Comparatively, Hill-Rom Holdings has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Zimmer Biomet Holdings and Hill-Rom Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zimmer Biomet Holdings 1 6 13 1 2.67
Hill-Rom Holdings 0 1 5 0 2.83

Zimmer Biomet Holdings currently has a consensus price target of $138.47, indicating a potential upside of 14.24%. Hill-Rom Holdings has a consensus price target of $86.83, indicating a potential upside of 8.11%. Given Zimmer Biomet Holdings’ higher probable upside, research analysts clearly believe Zimmer Biomet Holdings is more favorable than Hill-Rom Holdings.

Earnings & Valuation

This table compares Zimmer Biomet Holdings and Hill-Rom Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Zimmer Biomet Holdings $7.78 billion 3.15 $2.80 billion $3.48 34.83
Hill-Rom Holdings $2.71 billion 1.95 $465.30 million $1.73 46.43

Zimmer Biomet Holdings has higher revenue and earnings than Hill-Rom Holdings. Zimmer Biomet Holdings is trading at a lower price-to-earnings ratio than Hill-Rom Holdings, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Zimmer Biomet Holdings and Hill-Rom Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zimmer Biomet Holdings 9.12% 16.70% 6.18%
Hill-Rom Holdings 4.27% 19.99% 5.73%

Dividends

Zimmer Biomet Holdings pays an annual dividend of $0.96 per share and has a dividend yield of 0.8%. Hill-Rom Holdings pays an annual dividend of $0.72 per share and has a dividend yield of 0.9%. Zimmer Biomet Holdings pays out 27.6% of its earnings in the form of a dividend. Hill-Rom Holdings pays out 41.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Hill-Rom Holdings has raised its dividend for 6 consecutive years. Hill-Rom Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

85.2% of Zimmer Biomet Holdings shares are held by institutional investors. Comparatively, 82.6% of Hill-Rom Holdings shares are held by institutional investors. 1.1% of Zimmer Biomet Holdings shares are held by insiders. Comparatively, 2.2% of Hill-Rom Holdings shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Zimmer Biomet Holdings beats Hill-Rom Holdings on 11 of the 17 factors compared between the two stocks.

About Zimmer Biomet Holdings

Zimmer Biomet Holdings, Inc. is engaged in designing, manufacturing and marketing of orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; office-based technologies; spine, craniomaxillofacial and thoracic products; dental implants, and related surgical products. The Company’s products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. The Company manages its operations through three geographic operating segments: the Americas, consisting principally of the United States and other North, Central and South American markets; EMEA, consisting principally of Europe and the Middle East and African markets, and Asia Pacific, consisting primarily of Japan and other Asian and Pacific markets. The Company’s product category segments include Americas Spine, Office Based Technologies, Craniomaxillofacial and Thoracic (CMF), and Dental.

About Hill-Rom Holdings

Hill-Rom Holdings, Inc. is a global medical technology company. The Company operates through four segments: North America Patient Support Systems, International Patient Support Systems, Front Line Care and Surgical Solutions. The Company’s products and services include Patient Support Systems, Front Line Care and Surgical Solutions. The Company sells and rents its specialty frames and surfaces, and mobility solutions, as well as its clinical workflow solutions, in the United States and Canada through its North America Patient Support Systems segment, and in regions outside of the United States and Canada through its International Patient Support Systems segment. Its Front Line Care segment globally sells and rents respiratory care products, and sells medical diagnostic equipment and a diversified portfolio of devices that assess, diagnose, treat and manage a range of illnesses and diseases. Under its Surgical Solutions segment, the Company sells its surgical products globally.

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