Zimmer Biomet (NYSE: ZBH) and Tandem Diabetes Care (NASDAQ:TNDM) are both medical companies, but which is the better business? We will compare the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, profitability, institutional ownership and valuation.

Institutional and Insider Ownership

85.4% of Zimmer Biomet shares are owned by institutional investors. 1.1% of Zimmer Biomet shares are owned by company insiders. Comparatively, 20.9% of Tandem Diabetes Care shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Zimmer Biomet has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500. Comparatively, Tandem Diabetes Care has a beta of 0.09, suggesting that its share price is 91% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Zimmer Biomet 8.36% 16.29% 6.17%
Tandem Diabetes Care -79.45% -1,177.11% -74.29%

Valuation and Earnings

This table compares Zimmer Biomet and Tandem Diabetes Care’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Zimmer Biomet $7.68 billion 2.98 $305.90 million $3.18 35.56
Tandem Diabetes Care $84.25 million 0.33 -$83.44 million ($19.79) -0.14

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Zimmer Biomet and Tandem Diabetes Care, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zimmer Biomet 1 6 14 1 2.68
Tandem Diabetes Care 0 4 2 0 2.33

Zimmer Biomet currently has a consensus price target of $135.40, indicating a potential upside of 19.75%. Tandem Diabetes Care has a consensus price target of $13.00, indicating a potential upside of 379.70%. Given Tandem Diabetes Care’s higher possible upside, analysts plainly believe Tandem Diabetes Care is more favorable than Zimmer Biomet.

Dividends

Zimmer Biomet pays an annual dividend of $0.96 per share and has a dividend yield of 0.8%. Tandem Diabetes Care does not pay a dividend. Zimmer Biomet pays out 30.2% of its earnings in the form of a dividend.

Summary

Zimmer Biomet beats Tandem Diabetes Care on 13 of the 16 factors compared between the two stocks.

Zimmer Biomet 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.

Tandem Diabetes Care Company Profile

Tandem Diabetes Care, Inc. is a medical device company. The Company is engaged in designing, developing and commercializing products for people with insulin-dependent diabetes. The Company manufactures and sells three insulin pump products, which include t:slim Insulin Delivery System (t:slim), t:flex Insulin Delivery System (t:flex) and t:slim G4 Insulin Delivery System (t:slim G4). Its technology platform features Micro-Delivery Technology, a miniaturized pumping mechanism, which draws insulin from a flexible bag within the pump’s cartridge rather than relying on a syringe and plunger mechanism. It also features a software, which is a vivid color touch screen and a micro- universal serial bus (USB) connection that supports both a rechargeable battery and uploads to t:connect Diabetes Management Application (t:connect), its custom cloud-based data management application that provides display therapy management data from the pump and supported blood glucose meters.

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