Zimmer Biomet

Methodology

Zimmer Biomet's fair value calculation is complicated by the mature, slow-growth nature of orthopedic implants and the impact of pricing pressure, competition from smaller players, and procedure volume volatility. The method works best when normalized for mid-cycle elective surgery volumes, as procedure deferrals during economic weakness or pandemic disruptions create misleading signals. Investors should also consider that innovation in robotics and enabling technologies may provide upside beyond traditional implant growth rates.

Methodology

Zimmer Biomet typically trades at moderate PEG ratios reflecting its position as a leading orthopedic device company with modest growth constrained by mature markets and pricing pressure. The PEG framework works reasonably well for comparing Zimmer to peers like Stryker, though investors should normalize for knee and hip implant market dynamics and the potential for robotics to accelerate growth. As robotic-assisted surgery adoption increases, the PEG may reflect improving growth quality and competitive positioning.

Methodology

Zimmer Biomet pays a modest dividend reflecting the cash-generative nature of its implant business despite modest growth, making PEGY more relevant than PEG alone for mature medical device investors. The dividend provides tangible return while management invests in robotics, digital surgery platforms, and international expansion. For income-focused medical device investors, PEGY captures both the steady cash generation from orthopedic procedures and the dividend supported by durable demand for joint replacements.