Zimmer Holdings Inc. Earnings: Fourth Straight Quarter of Profit Growth

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

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Zimmer Holdings Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the medical appliances and equipment company rose to $156 million (87 cents per share) vs. $34.9 million (19 cents per share) in the same quarter a year earlier. This is a more than fourfold rise from the year earlier quarter.

Revenue: Rose 2.9% to $1.17 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: ZMH reported adjusted net income of $1.36 per share. By that measure, the company beat the mean estimate of $1.34 per share. Analysts were expecting revenue of $1.16 billion.

Quoting Management: “Zimmer achieved a solid finish to 2011, driven by above-market performance in our Europe, Middle East and Africa and Asia Pacific businesses, as well as the ongoing positive contribution of innovative and proprietary product introductions across our musculoskeletal portfolio,” said David Dvorak, Zimmer President and CEO. “We expect to deliver sustained growth in sales, earnings and cash flow in 2012 through continued execution of the Company’s strategic priorities, including growth initiatives, transformation programs and disciplined capital allocation.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the third quarter, net income rose 0.2% and in the second quarter, the figure rose 23.1%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by one cent in the third quarter, by 2 cents in the second quarter, and by 6 cents in the first quarter.

Gross margin shrank 1.8 percentage points to 74%. The contraction appeared to be driven by increased costs, which rose 10.6% from the year earlier quarter while revenue rose 2.9%.

Revenue has risen the past four quarters. Revenue increased 6.9% to $1.03 billion in the third quarter. The figure rose 7.5% in the second quarter from the year earlier and climbed 5% in the first quarter from the year-ago quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from $1.31 a share to $1.30 over the last seven days. The average estimate for the fiscal year is $4.78 per share, a rise from $4.77 ninety days ago.

Competitors to Watch: Stryker Corporation (NYSE:SYK), Exactech, Inc. (NASDAQ:EXAC), Wright Medical Group, Inc. (NASDAQ:WMGI), RTI Biologics Inc. (NASDAQ:RTIX), Tornier N.V. (NASDAQ:TRNX), Smith & Nephew plc (NYSE:SNN), MAKO Surgical Corp. (NASDAQ:MAKO), NuVasive, Inc. (NASDAQ:NUVA), TranS1 Inc. (NASDAQ:TSON), and Alphatec Holdings, Inc. (NASDAQ:ATEC).

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

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com