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Will Zimmer (ZMH) Miss Earnings Estimates?

Zacks Equity Research

Zimmer Holdings Inc. (ZMH) is scheduled to report its fourth-quarter 2013 results before the opening bell on Jan 30. Last quarter, the company delivered a positive earnings surprise of 0.81%. Let’s see how things are shaping up for this announcement.

Factors at Play

Barring the second quarter, Zimmer had posted positive earnings surprises in all of the last four quarters with an average beat of 0.54%.

In order to streamline its business, Zimmer is continuing with its global restructuring program. A number of new products are slated for launch that will have a positive impact on the top line. After several quarters of challenging market conditions in the form of reduced procedure volume and pricing pressure, the company is gradually witnessing stability in the global musculoskeletal market with better-than-expected sales growth in certain geographies.

However, pricing continues to remain a major headwind for Zimmer. Moreover, with continued weakening of yen, the company is expected to face negative currency impact on its sales. Earlier, while updating its growth outlook for 2013, Zimmer expected currency movement to lower revenues by 1.5% resulting in 2.0% revenue growth on a reported basis.

Earnings Whispers?

Our proven model does not conclusively show that Zimmer is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Earnings ESP for Zimmer is 0.00% since the Most Accurate estimate stands at $1.61, in line with the Zacks Consensus Estimate.

Zacks Rank: Zimmer’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP, makes surprise prediction difficult.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements, i.e., a positive Zacks Earnings ESP and a Zacks Rank #1, #2 or #3.

DexCom, Inc. (DXCM) has an earnings ESP of +14.29% and holds a Zacks Rank #2 (Buy). DexCom is expected to report its fourth-quarter earnings on Feb 20.

Cardinal Health, Inc. (CAH) has an earnings ESP of +2.41% and holds a Zacks Rank #1 (Strong Buy). Cardinal Health will report second-quarter fiscal 2014 earnings on Jan 30.

Symmetry Medical, Inc. (SMA) has an earnings ESP of +14.29% and holds a Zacks Rank #3. Symmetry Medical will be reporting fourth-quarter earnings on Feb 20.

Read the Full Research Report on ZMH
Read the Full Research Report on CAH
Read the Full Research Report on SMA
Read the Full Research Report on DXCM

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