Zimmer Holdings Earnings: Tops Profit Estimate, Off the Revenue Mark

S&P 500 (NYSE:SPY) component Zimmer Holdings Inc. (NYSE:ZMH) reported its results for the third quarter. Zimmer Holdings designs, develops, manufactures and markets orthopedic and dental reconstructive implants, spinal implants, and trauma products.

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Zimmer Holdings Inc. Earnings Cheat Sheet

Results: Net income for Zimmer Holdings Inc. fell to $178.1 million ($1.02 per share) vs. $191.5 million ($1.01 per share) a year earlier. This is a decline of 7% from the year-earlier quarter.

Revenue: Fell 0.6% to $1.03 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Zimmer Holdings Inc. reported adjusted net income of $1.15 per share. By that measure, the company beat the mean estimate of $1.13 per share. It fell short of the average revenue estimate of $1.14 billion.

Quoting Management: “Zimmer’s third quarter performance was highlighted by strong operating margins, as well as above-market sales growth in our Europe, Middle East and Africa business,” said David Dvorak, Zimmer President and CEO. “Our focus continues to be creating value for our stockholders. We will achieve that goal through the successful commercialization of innovative new products across the portfolio, ongoing progress in our operational excellence programs, and disciplined capital deployment.”

Key Stats:

Last quarter’s profit decreases breaks a four-quarter run of profit increases. In the second quarter, net income rose 5.3% from the year earlier, while the figure increased 0.3% in the first quarter, more than fourfold in the fourth quarter of the last fiscal year and 0.2% in the third quarter of the last fiscal year.

The company has now beaten estimates the last two quarters. In the second quarter, it topped expectations with net income of $1.34 versus a mean estimate of net income of $1.32 per share.

Revenue has fallen in the past two quarters. In the second quarter, revenue declined 1.1% to $1.13 billion from the year-earlier quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from $1.51 a share to $1.52 over the last ninety days. For the fiscal year, the average estimate has moved down from $5.28 a share to $5.27 over the last thirty days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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