Critical Review: Zimmer Biomet (NYSE:ZBH) versus GE HealthCare Technologies (NASDAQ:GEHC)

Zimmer Biomet (NYSE:ZBH) and GE HealthCare Technologies (NASDAQ:GEHC) are both large-cap healthcare companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.

Dividends

Zimmer Biomet pays an annual dividend of $0.96 per share and has a dividend yield of 1.1%. GE HealthCare Technologies pays an annual dividend of $0.14 per share and has a dividend yield of 0.2%. Zimmer Biomet pays out 23.4% of its earnings in the form of a dividend. GE HealthCare Technologies pays out 3.2% 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. GE HealthCare Technologies has raised its dividend for 1 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Zimmer Biomet and GE HealthCare Technologies, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zimmer Biomet	2	14	6	0	2.18
GE HealthCare Technologies	0	11	11	0	2.50

Zimmer Biomet presently has a consensus target price of $103.00, suggesting a potential upside of 17.07%. GE HealthCare Technologies has a consensus target price of $78.39, suggesting a potential upside of 22.52%. Given GE HealthCare Technologies’ stronger consensus rating and higher probable upside, analysts clearly believe GE HealthCare Technologies is more favorable than Zimmer Biomet.

Earnings & Valuation

This table compares Zimmer Biomet and GE HealthCare Technologies”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zimmer Biomet	$8.23 billion	2.04	$705.20 million	$4.11	21.41
GE HealthCare Technologies	$20.62 billion	1.40	$2.08 billion	$4.36	14.67

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

Institutional & Insider Ownership

88.9% of Zimmer Biomet shares are held by institutional investors. Comparatively, 82.1% of GE HealthCare Technologies shares are held by institutional investors. 1.3% of Zimmer Biomet shares are held by insiders. Comparatively, 0.4% of GE HealthCare Technologies shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Zimmer Biomet and GE HealthCare Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zimmer Biomet	9.48%	13.12%	7.23%
GE HealthCare Technologies	9.33%	20.12%	5.74%

Volatility & Risk

Zimmer Biomet has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500. Comparatively, GE HealthCare Technologies has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500.

Summary

GE HealthCare Technologies beats Zimmer Biomet on 10 of the 17 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 GE HealthCare Technologies

GE HealthCare Technologies Inc. engages in the development, manufacture, and marketing of products, services, and complementary digital solutions used in the diagnosis, treatment, and monitoring of patients in the United States, Canada, and internationally. The company operates through four segments: Imaging, Ultrasound, Patient Care Solutions, and Pharmaceutical Diagnostics. The Imaging segment offers molecular imaging, computed tomography (CT) scanning, magnetic resonance (MR) imaging, image-guided therapy, X-ray systems, and women’s health products. The Ultrasound segment provides medical devices and solutions for screening, diagnosis, treatment, and monitoring of certain diseases in clinical areas, such as radiology and primary care, women’s health, cardiovascular, and point of care and handheld ultrasound solutions, as well as surgical visualization and guidance products. The Patient Care Solutions segment provides medical devices, consumables, services, and digital solutions. Its portfolio includes patient monitoring solutions, anesthesia delivery and respiratory care products, electrocardiogram solutions, maternal infant care products, and consumables and services. The Pharmaceutical Diagnostics supplies diagnostic agents, including CT, angiography and X-ray, MR, single-photon emission computed tomography, positron emission tomography, and ultrasound to the radiology and nuclear medicine industry. The segment also provides contrast media pharmaceuticals that are administered to a patient prior to certain diagnostic scans to increase the visibility of tissues or structures during imaging exams; and molecular imaging agents or radiopharmaceuticals, which are molecular tracers labeled with radioisotopes. It has an AI collaboration with Mass General Brigham. The company was formerly known as GE Healthcare Holding LLC and changed its name to GE HealthCare Technologies Inc. in December 2022. The company was incorporated in 2022 and is headquartered in Chicago, Illinois.