Critical Survey: Inspire Medical Systems (NYSE:INSP) versus Zimmer Biomet (NYSE:ZBH)

Inspire Medical Systems (NYSE:INSP) and Zimmer Biomet (NYSE:ZBH) are both healthcare companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Risk & Volatility

Inspire Medical Systems has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500. Comparatively, Zimmer Biomet has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500.

Profitability

This table compares Inspire Medical Systems and Zimmer Biomet’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Inspire Medical Systems	11.43%	7.32%	6.39%
Zimmer Biomet	8.95%	13.02%	7.17%

Valuation and Earnings

This table compares Inspire Medical Systems and Zimmer Biomet”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Inspire Medical Systems	$911.98 million	2.04	$145.42 million	$3.44	18.65
Zimmer Biomet	$8.23 billion	2.51	$705.20 million	$3.95	27.43

Zimmer Biomet has higher revenue and earnings than Inspire Medical Systems. Inspire Medical Systems is trading at a lower price-to-earnings ratio than Zimmer Biomet, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for Inspire Medical Systems and Zimmer Biomet, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Inspire Medical Systems	3	13	3	1	2.10
Zimmer Biomet	1	16	7	0	2.25

Inspire Medical Systems currently has a consensus target price of $71.24, suggesting a potential upside of 11.06%. Zimmer Biomet has a consensus target price of $112.74, suggesting a potential upside of 4.05%. Given Inspire Medical Systems’ higher possible upside, equities research analysts clearly believe Inspire Medical Systems is more favorable than Zimmer Biomet.

Institutional and Insider Ownership

94.9% of Inspire Medical Systems shares are held by institutional investors. Comparatively, 88.9% of Zimmer Biomet shares are held by institutional investors. 2.2% of Inspire Medical Systems shares are held by company insiders. Comparatively, 1.3% of Zimmer Biomet shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Zimmer Biomet beats Inspire Medical Systems on 8 of the 15 factors compared between the two stocks.

About Inspire Medical Systems

Inspire Medical Systems, Inc., a medical technology company, focuses on the development and commercialization of minimally invasive solutions for patients with obstructive sleep apnea (OSA) in the United States and internationally. The company offers Inspire system, a neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA. It also develops a novel, closed-loop solution that continuously monitors a patient's breathing and delivers mild hypoglossal nerve stimulation to maintain an open airway. The company was incorporated in 2007 and is headquartered in Golden Valley, Minnesota.

About Zimmer Biomet

Zimmer Biomet Holdings, Inc., together with its subsidiaries, operates as a medical technology company worldwide. The company designs, manufactures, and markets orthopedic reconstructive products, such as knee and hip products; S.E.T. products, including sports medicine, biologics, foot and ankle, extremities, and trauma products; craniomaxillofacial and thoracic products comprising face and skull reconstruction products, as well as products that fixate and stabilize the bones of the chest to facilitate healing or reconstruction after open heart surgery, trauma, or for deformities of the chest. It also offers robotic, surgical, and bone cement products. The company's products and solutions are used to treat patients suffering from disorders of, or injuries to, bones, joints, or supporting soft tissues. It serves orthopedic surgeons, neurosurgeons, hospitals, stocking distributors, healthcare dealers, and other specialists, as well as agents, healthcare purchasing organizations, or buying groups. The company was formerly known as Zimmer Holdings, Inc. and changed its name to Zimmer Biomet Holdings, Inc. in June 2015. Zimmer Biomet Holdings, Inc. was founded in 1927 and is headquartered in Warsaw, Indiana.