Critical Review: West Pharmaceutical Services (WST) and Zimmer Biomet Holdings (ZBH)
West Pharmaceutical Services (NYSE: WST) and Zimmer Biomet Holdings (NYSE:ZBH) are both mid-cap medical companies, but which is the better business? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, valuation, analyst recommendations and dividends.
Institutional & Insider Ownership
90.6% of West Pharmaceutical Services shares are held by institutional investors. Comparatively, 85.4% of Zimmer Biomet Holdings shares are held by institutional investors. 1.9% of West Pharmaceutical Services shares are held by company insiders. Comparatively, 1.1% of Zimmer Biomet Holdings shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
West Pharmaceutical Services pays an annual dividend of $0.52 per share and has a dividend yield of 0.5%. Zimmer Biomet Holdings pays an annual dividend of $0.96 per share and has a dividend yield of 0.8%. West Pharmaceutical Services pays out 22.2% of its earnings in the form of a dividend. Zimmer Biomet Holdings pays out 27.6% 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. West Pharmaceutical Services has raised its dividend for 24 consecutive years.
Volatility & Risk
West Pharmaceutical Services has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500. Comparatively, Zimmer Biomet Holdings has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500.
This is a breakdown of recent ratings for West Pharmaceutical Services and Zimmer Biomet Holdings, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|West Pharmaceutical Services||0||0||3||0||3.00|
|Zimmer Biomet Holdings||1||6||13||1||2.67|
West Pharmaceutical Services currently has a consensus target price of $93.78, indicating a potential downside of 0.83%. Zimmer Biomet Holdings has a consensus target price of $138.68, indicating a potential upside of 20.09%. Given Zimmer Biomet Holdings’ higher probable upside, analysts clearly believe Zimmer Biomet Holdings is more favorable than West Pharmaceutical Services.
This table compares West Pharmaceutical Services and Zimmer Biomet Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|West Pharmaceutical Services||11.42%||14.02%||9.32%|
|Zimmer Biomet Holdings||9.12%||16.70%||6.18%|
Valuation and Earnings
This table compares West Pharmaceutical Services and Zimmer Biomet Holdings’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|West Pharmaceutical Services||$1.54 billion||4.54||$317.90 million||$2.34||40.41|
|Zimmer Biomet Holdings||$7.78 billion||3.00||$2.80 billion||$3.48||33.18|
Zimmer Biomet Holdings has higher revenue and earnings than West Pharmaceutical Services. Zimmer Biomet Holdings is trading at a lower price-to-earnings ratio than West Pharmaceutical Services, indicating that it is currently the more affordable of the two stocks.
West Pharmaceutical Services Company Profile
West Pharmaceutical Services, Inc. is a manufacturer of packaging components and delivery systems for injectable drugs and healthcare products. The Company’s products include vial containment solutions, prefillable systems, self-injection platforms, cartridge systems and components, reconstitution and transfer systems, intradermal delivery solutions, specialty components, and contract manufacturing and analytical services. The Company’s segments include Proprietary Products and Contract-Manufactured Products. The Proprietary Products segment develops commercial and operational strategies across its global network, with specific emphasis on product offerings to biologic, generic and pharmaceutical drug customers. The Contract-Manufactured Products segment serves as an integrated business focused on the design, manufacture and automated assembly of various devices, primarily for pharmaceutical, diagnostic and medical device customers.
Zimmer Biomet Holdings Company Profile
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.
Receive News & Ratings for West Pharmaceutical Services Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for West Pharmaceutical Services Inc. and related companies with Analyst Ratings Network's FREE daily email newsletter.