Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Zimmer Biomet Holdings, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 3.9% to 5.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 71, DPO 56, DIO 368). At a 7.0% WACC with mid-year discounting, the terminal value (82% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 17.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $182.92 per share, suggesting ZBH is undervalued by 105.7% at the current price of $88.91.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,802 | 1,869 | 1,936 | 2,042 | 2,149 | 2,203 |
| (−) Net Interest | 249 | 258 | 267 | 282 | 297 | 304 |
| (+) D&A | 269 | 301 | 321 | 309 | 307 | 315 |
| EBITDA | 2,320 | 2,428 | 2,524 | 2,633 | 2,753 | 2,822 |
| (−) Tax | 253 | 263 | 272 | 287 | 302 | — |
| (−) CapEx | 309 | 321 | 332 | 350 | 369 | — |
| (−) ΔWC | -91 | 145 | 144 | 231 | 231 | — |
| Free Cash Flow (FCF) | 1,849 | 1,699 | 1,776 | 1,765 | 1,851 | — |
| Peers' EBITDA Multiple | 17.7x | |||||
| Terminal Value | 49,975 | |||||
| WACC / Discount Rate | 6.97% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,787 | 1,536 | 1,500 | 1,394 | 1,367 | 35,689 |
| Enterprise Value | 43,274 | |||||
| Projection Period | 7,585 | 17.5% | ||||
| Terminal Value | 35,689 | 82.5% | ||||
| (−) Current Net Debt | 6,927 | |||||
| Equity Value | 36,347 | |||||
| (÷) Outstanding Shares | 199M | |||||
| Fair Price | $183 | +105.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 13.7x | 15.7x | 17.7x | 19.7x | 21.7x |
|---|---|---|---|---|---|
| 5.0% | $158 | $180 | $202 | $225 | $247 |
| 6.0% | $150 | $171 | $192 | $214 | $235 |
| 7.0% | $142 | $163 | $183 | $203 | $223 |
| 8.0% | $135 | $155 | $174 | $193 | $213 |
| 9.0% | $128 | $147 | $165 | $184 | $202 |
Current price: $88.91. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.