4. E and Beta

4. E and Beta - Zimmer turned up recently on our Foxhole...

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DOW JONES REPRINTS This copy is for your personal, non- commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit: www.djreprints.com . See a sample reprint in PDF format . Order a reprint of this article now . November 9, 2006 SMARTMONEY STOCK SCREEN Safe Stocks By JACK HOUGH SmartMoney November 9, 2006; Page D3 Zimmer Holdings says it knows women's knees. The medical-equipment supplier used CT scans of 800 femurs to analyze the differences between women's knees and men's and come up with a knee-replacement for women that fits and feels better than the smaller versions of knees designed for men that are typically used for women. The company says its Gender Solutions knee offers improved fit and fewer operating-table adjustments compared with products from other implant makers. The product is in early stages of launch. Demand has thus far exceeded supply; Zimmer vows to have enough knees to meet orders by year's end.
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Unformatted text preview: Zimmer turned up recently on our Foxhole screen, which looks for safe stocks to hold when you're worried about the market's direction. The screen uses beta, a measure of volatility, to seek out stocks that tend to zig and zag 30% less than the overall market. It also looks for strong balance sheets, healthy sales and earnings growth and modest stock valuations. Based in Warsaw, Ind., Zimmer has trailing 12-month sales of $3.4 billion and an operating margin that's one of the best of its industry: 33.6% over the past year. Its stock has climbed 129% over the past five years. Long-term growth prospects for Zimmer are strong. Wall Street expects it to increase earnings by 16% a year over the next five years. Its shares trade at 21 times forecast 2006 earnings. Divide the P/E ratio by the growth forecast and you get a PEG ratio of around 1.3. That makes the stock look about 15% cheaper than the broad market and a smidgen cheaper than its peer group....
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This note was uploaded on 09/27/2009 for the course UGBA 133 taught by Professor Distad during the Summer '08 term at Berkeley.

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