Zimmer Biomet (NYSE:ZBH) and Stryker (NYSE:SYK) Head-To-Head Review

Zimmer Biomet (NYSE:ZBH) and Stryker (NYSE:SYK) are both large-cap medical companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Risk and Volatility

Zimmer Biomet has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500. Comparatively, Stryker has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500.

Insider & Institutional Ownership

88.9% of Zimmer Biomet shares are held by institutional investors. Comparatively, 77.1% of Stryker shares are held by institutional investors. 1.4% of Zimmer Biomet shares are held by insiders. Comparatively, 5.9% of Stryker 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.

Analyst Recommendations

This is a summary of recent ratings and price targets for Zimmer Biomet and Stryker, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zimmer Biomet	3	10	8	1	2.32
Stryker	0	5	14	0	2.74

Zimmer Biomet currently has a consensus target price of $106.20, suggesting a potential upside of 20.62%. Stryker has a consensus target price of $427.50, suggesting a potential upside of 27.25%. Given Stryker’s stronger consensus rating and higher probable upside, analysts clearly believe Stryker is more favorable than Zimmer Biomet.

Dividends

Zimmer Biomet pays an annual dividend of $0.96 per share and has a dividend yield of 1.1%. Stryker pays an annual dividend of $3.52 per share and has a dividend yield of 1.0%. Zimmer Biomet pays out 27.1% of its earnings in the form of a dividend. Stryker pays out 41.9% 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. Stryker has increased its dividend for 32 consecutive years. Zimmer Biomet is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Zimmer Biomet and Stryker”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zimmer Biomet	$8.23 billion	2.09	$705.20 million	$3.54	24.87
Stryker	$25.12 billion	5.12	$3.25 billion	$8.40	39.99

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

Profitability

This table compares Zimmer Biomet and Stryker’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zimmer Biomet	8.56%	12.93%	7.11%
Stryker	12.92%	24.41%	11.25%

Summary

Stryker beats Zimmer Biomet on 14 of the 18 factors compared between the two stocks.

About Zimmer Biomet

Zimmer Biomet Holdings, Inc., together with its subsidiaries, operates as a medical technology company worldwide. The company designs, manufactures, and markets orthopedic reconstructive products, such as knee and hip products; S.E.T. products, including sports medicine, biologics, foot and ankle, extremities, and trauma products; craniomaxillofacial and thoracic products comprising face and skull reconstruction products, as well as products that fixate and stabilize the bones of the chest to facilitate healing or reconstruction after open heart surgery, trauma, or for deformities of the chest. It also offers robotic, surgical, and bone cement products. The company's products and solutions are used to treat patients suffering from disorders of, or injuries to, bones, joints, or supporting soft tissues. It serves orthopedic surgeons, neurosurgeons, hospitals, stocking distributors, healthcare dealers, and other specialists, as well as agents, healthcare purchasing organizations, or buying groups. The company was formerly known as Zimmer Holdings, Inc. and changed its name to Zimmer Biomet Holdings, Inc. in June 2015. Zimmer Biomet Holdings, Inc. was founded in 1927 and is headquartered in Warsaw, Indiana.

About Stryker

Stryker Corporation operates as a medical technology company. The company operates through two segments, MedSurg and Neurotechnology, and Orthopaedics and Spine. The Orthopaedics and Spine segment provides implants for use in total joint replacements, such as hip, knee and shoulder, and trauma and extremities surgeries. This segment also offers spinal implant products comprising cervical and thoracolumbar systems that include fixation, minimally invasive and interbody systems used in spinal injury, complex spine and degenerative therapies. The MedSurg and Neurotechnology segment offers surgical equipment, and surgical navigation systems, endoscopic and communications systems, patient handling, emergency medical equipment and intensive care disposable products, reprocessed and remanufactured medical devices, clinical communication and workflow solutions, and other medical device products that are used in various medical specialties, as well as patient and caregiver safety technologies. This segment also provides neurosurgical, neurovascular and craniomaxillofacial implant products, which include products used for minimally invasive endovascular procedures; products for brain and open skull based surgical procedures; orthobiologic and biosurgery products, such as synthetic bone grafts and vertebral augmentation products; minimally invasive products for the treatment of acute ischemic and hemorrhagic stroke; and craniomaxillofacial implant products, including cranial, maxillofacial, and chest wall devices, as well as dural substitutes and sealants. The company sells its products to doctors, hospitals, and other healthcare facilities through company-owned subsidiaries and branches, as well as third-party dealers and distributors in approximately 75 countries. Stryker Corporation was founded in 1941 and is headquartered in Portage, Michigan.