DCF Studio

    ZBH · NYQ · Healthcare

    Zimmer Biomet Holdings, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 78.26

    Market price

    USD 97.35

    Implied upside

    -19.6%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedReported capital expenditure averages 4.12% of revenue against depreciation and amortisation of 13.12%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 13.12% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 78.26-19.6%
    Exit multiple
    USD 105.64+8.5%
    Market price
    USD 97.35

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 8.6bnUSD 8.9bnUSD 9.2bnUSD 9.5bnUSD 9.8bnUSD 10.1bnUSD 10.4bnUSD 10.7bnUSD 11.0bnUSD 11.2bn+3.0%
    EBITUSD 1.6bnUSD 1.6bnUSD 1.7bnUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.9bnUSD 2.0bnUSD 2.0bnUSD 2.1bn+3.0%
    NOPATUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.7bnUSD 1.7bnUSD 1.8bn+3.0%
    Add depreciation & amortisationUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.5bn+3.0%
    Less capital expenditureUSD -1.1bnUSD -1.2bnUSD -1.3bnUSD -1.4bnUSD -1.5bnUSD -1.6bnUSD -1.8bnUSD -1.9bnUSD -2.0bnUSD -2.1bn+7.3%
    Capex, % of revenue13.1%13.8%14.4%15.0%15.7%16.3%17.0%17.6%18.2%18.9%-
    Less increase in working capitalUSD -166.9mUSD -139.3mUSD -138.9mUSD -138.2mUSD -137.1mUSD -135.5mUSD -133.6mUSD -131.3mUSD -128.6mUSD -125.5m-3.1%
    Free cashflow to firmUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.0bnUSD 997.0m-1.9%
    Discount factor0.96750.90560.84760.79340.74260.69510.65060.60900.57000.5335-
    Present valueUSD 1.1bnUSD 1.1bnUSD 1.0bnUSD 933.5mUSD 858.7mUSD 787.0mUSD 718.4mUSD 653.0mUSD 590.9mUSD 531.9m-
    Present Value Of The ForecastUSD 8.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.646Reported 0.472, pulled toward 1.0 (Blume)
    Cost of equity7.63%Risk-free + beta x equity risk premium
    Cost of debt5.67%Risk-free + 78bp, the spread for a A rating at 4.6x interest cover. Book interest / average debt was lower, at 4.3%.
    Market capitalisationUSD 18.6bn71.2% of capital
    Total debtUSD 7.5bn28.8% of capital, book value as a proxy
    Tax rate13.9%Effective, capped at statutory
    WACC6.84%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 78.26

    63% of EV

    Forecast FCFF, final year
    USD 997.0m
    Capex at depreciation, working capital in reinvestment
    USD 1.8bn
    Less reinvestment at g/ROIC (36.6% of NOPAT)
    USD -647.0m
    Capitalised
    USD 1.1bn
    ROIC (WACC floor)
    6.8%
    Terminal value, undiscounted
    USD 26.5bn
    Terminal value, discounted
    USD 14.2bn
    Enterprise value
    USD 22.5bn
    Less net debt
    USD 6.9bn
    Equity value
    USD 15.6bn

    Exit at 10.4x EBITDA

    Value per shareUSD 105.64

    70% of EV

    Terminal value, undiscounted
    USD 36.7bn
    Terminal value, discounted
    USD 19.6bn
    Enterprise value
    USD 27.9bn
    Less net debt
    USD 6.9bn
    Equity value
    USD 21.0bn

    Spread between methods: 30%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.84%146.39151.85160.47174.83201.38
    5.84%105.12104.57104.39104.79106.14
    6.84%81.4479.8578.2676.6775.09
    7.84%66.0664.7563.4462.1360.82
    8.84%54.2153.1152.0150.9149.81

    Outlined: this model. Green text: above today's price of 97.35. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year5.9%3.2%5.3%
    EBIT margin19.9%18.3%21.2%
    Discount rate-6.8%6.0%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.