Home > Comparison > Healthcare > STE vs ZBH
The strategic rivalry between STERIS plc and Zimmer Biomet Holdings defines the healthcare medical devices sector’s competitive landscape. STERIS operates as a diversified infection prevention and sterilization services provider. Zimmer Biomet specializes in musculoskeletal and reconstructive orthopaedic devices. This head-to-head pits broad procedural solutions against focused implant innovation. This analysis will identify which trajectory offers superior risk-adjusted potential for a diversified healthcare portfolio in 2026.
Table of contents
Companies Overview
STERIS plc and Zimmer Biomet Holdings, Inc. both hold significant roles in the global medical devices sector with distinct market approaches.
STERIS plc: Infection Prevention and Sterilization Leader
STERIS plc is a global provider of infection prevention products and services. It generates revenue through diversified segments including healthcare equipment, sterilization technologies, life sciences consumables, and dental instruments. In 2026, STERIS emphasizes expanding its service and maintenance business to deepen client relationships and improve sterile processing efficiencies across hospitals and pharmaceutical manufacturers.
Zimmer Biomet Holdings, Inc.: Orthopedic and Surgical Innovation
Zimmer Biomet specializes in musculoskeletal healthcare products, focusing on orthopaedic reconstructive devices like knees and hips, along with surgical instruments and dental implants. Its 2026 strategy centers on advancing product innovation and expanding its footprint in emerging markets, targeting orthopedic surgeons and healthcare distributors with a broad portfolio designed to treat bone and joint disorders.
Strategic Collision: Similarities & Divergences
Both companies operate in the medical devices industry but pursue contrasting philosophies: STERIS focuses on an integrated service and equipment ecosystem, while Zimmer Biomet invests heavily in product innovation and surgical specialization. They primarily compete in hospital procurement and surgical solutions markets. STERIS offers a stable, service-driven revenue model, whereas Zimmer Biomet presents growth potential through continuous product development and market expansion.
Income Statement Comparison
This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | STERIS plc (STE) | Zimmer Biomet (ZBH) |
|---|---|---|
| Revenue | 5.46B | 7.68B |
| Cost of Revenue | 3.06B | 2.19B |
| Operating Expenses | 1.54B | 4.20B |
| Gross Profit | 2.40B | 5.49B |
| EBITDA | 1.36B | 2.25B |
| EBIT | 882M | 1.25B |
| Interest Expense | 86M | 218M |
| Net Income | 615M | 904M |
| EPS | 6.24 | 4.45 |
| Fiscal Year | 2025 | 2024 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals which company converts revenue into profit most efficiently and sustains margin health over time.
STERIS plc Analysis
STERIS’s revenue climbed steadily from 3.1B in 2021 to 5.46B in 2025, reflecting a robust 75.7% growth over five years. Net income rose sharply to 615M in 2025, more than doubling since 2021. The company maintains healthy gross margins around 44%, with net margins expanding to 11.3%, underscoring improved operational efficiency and strong bottom-line momentum in the latest fiscal year.
Zimmer Biomet Holdings, Inc. Analysis
Zimmer Biomet’s revenue grew moderately from 6.13B in 2020 to 7.68B in 2024, a 25.3% increase. Net income surged impressively to 904M in 2024, recovering from a loss in 2020. The firm sustains a superior gross margin near 71%, with net margins at 11.8%. However, recent year net margin and EBIT contracted slightly, indicating emerging pressure on profitability despite solid scale.
Margin Discipline vs. Growth Velocity
STERIS delivers stronger revenue growth and expanding net margins, highlighting effective cost control and margin resilience. Zimmer Biomet boasts higher gross margins and a dramatic net income rebound but shows short-term margin erosion. For investors seeking growth with improving profitability, STERIS’s profile offers a more attractive combination of scale expansion and margin discipline.
Financial Ratios Comparison
These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of the companies compared below:
| Ratios | STERIS plc (STE) | Zimmer Biomet Holdings, Inc. (ZBH) |
|---|---|---|
| ROE | 9.31% | 7.25% |
| ROIC | 7.17% | 5.68% |
| P/E | 36.35 | 23.74 |
| P/B | 3.38 | 1.72 |
| Current Ratio | 1.96 | 1.91 |
| Quick Ratio | 1.39 | 0.99 |
| D/E | 0.33 | 0.50 |
| Debt-to-Assets | 21.71% | 29.04% |
| Interest Coverage | 10.05 | 5.90 |
| Asset Turnover | 0.54 | 0.36 |
| Fixed Asset Turnover | 2.58 | 3.75 |
| Payout ratio | 35.77% | 21.69% |
| Dividend yield | 0.98% | 0.91% |
| Fiscal Year | 2025 | 2024 |
Efficiency & Valuation Duel: The Vital Signs
Financial ratios act as the company’s DNA, uncovering hidden risks and revealing operational strength and valuation accuracy.
STERIS plc
STERIS shows a solid net margin at 11.26% but a weaker ROE of 9.31%, signaling moderate profitability. Its P/E of 36.35 marks the stock as expensive and stretched compared to sector norms. Shareholders receive a low 0.98% dividend yield, indicating a preference for reinvestment in R&D and growth initiatives, aligning with its innovation focus.
Zimmer Biomet Holdings, Inc.
Zimmer Biomet delivers a slightly higher net margin of 11.77% but a lower ROE at 7.25%, reflecting less efficient equity use. Its P/E of 23.74 suggests a more reasonable valuation, with a balanced mix of favorable and neutral ratios. Dividend yield stands at 0.91%, with capital allocation favoring steady operations and moderate growth.
Premium Valuation vs. Operational Safety
STERIS trades at a premium with stretched valuation metrics but maintains operational efficiency and reinvestment discipline. Zimmer Biomet offers a more balanced valuation and stronger coverage ratios, appealing to investors seeking stability. The choice depends on tolerance for growth risk versus value safety.
Which one offers the Superior Shareholder Reward?
I see that STERIS plc (STE) pays a dividend yield near 0.98%, with a moderate 36% payout ratio, indicating balanced income return and retained earnings for growth. STE also maintains a significant buyback program, enhancing shareholder value through share reduction. Zimmer Biomet Holdings (ZBH) offers a slightly lower dividend yield around 0.91%, but with a more conservative 22% payout ratio, preserving cash for acquisitions and R&D. ZBH’s buyback activity matches its dividend focus, signaling a disciplined capital allocation. Historically, STE’s higher payout and buybacks deliver stronger immediate returns, but ZBH’s strategy emphasizes sustainable growth. For 2026, I favor STE for superior total shareholder reward given its richer yield and robust buyback intensity.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of both firms, highlighting their strategic strengths and weaknesses across key financial metrics:
STERIS plc (STE) shows a balanced profile with favorable DCF and ROA scores, indicating efficient asset use and solid cash flow projections. Zimmer Biomet (ZBH) excels in DCF but lags in debt management, with a very unfavorable debt-to-equity score. STE offers more financial stability, while ZBH relies heavily on valuation advantages.
Bankruptcy Risk: Solvency Showdown
The Altman Z-Score gap signals differing bankruptcy risks: STE’s strong 5.9 score places it firmly in the safe zone, while ZBH’s 2.3 score puts it in the grey zone, indicating moderate financial distress risk:
Financial Health: Quality of Operations
Both companies score an 8 on the Piotroski scale, reflecting very strong financial health. Neither shows red flags internally, supporting robust operational quality and value potential:
How are the two companies positioned?
This section dissects the operational DNA of STE and ZBH by comparing their revenue distribution and internal dynamics. The goal is to confront their economic moats and identify the more resilient, sustainable advantage in today’s market.
Revenue Segmentation: The Strategic Mix
The following visual comparison dissects how STERIS plc and Zimmer Biomet diversify their income streams and where their primary sector bets lie:
STERIS balances its revenue between Product at $2.87B and Service at $2.59B in 2025, showcasing a near-even split that reduces concentration risk. Zimmer Biomet, however, pivots heavily on Knees at $3.17B, dwarfing other segments like Hips at $2.00B and S E T at $1.87B. This reliance on Knees signals a sector dominance but adds exposure to market shifts in that category, unlike STERIS’s diversified service-product ecosystem.
Strengths and Weaknesses Comparison
This table compares the Strengths and Weaknesses of STERIS plc and Zimmer Biomet Holdings, Inc.:
STERIS plc Strengths
- Balanced revenue from products (2.87B) and services (2.59B)
- Strong liquidity ratios: current (1.96) and quick (1.39)
- Low debt to equity (0.33) and favorable interest coverage (10.23)
- Favorable net margin (11.26%)
- Global presence including US and significant foreign locations
Zimmer Biomet Strengths
- Diversified product segments with strong knee (3.17B) and hip (2.00B) sales
- Favorable net margin (11.77%) and WACC (5.81%)
- Solid debt management with debt to equity (0.5) and interest coverage (5.76)
- Strong fixed asset turnover (3.75)
- Broad geographic reach across Americas (4.79B), EMEA, and Asia Pacific
STERIS plc Weaknesses
- Unfavorable ROE (9.31%) below WACC (8.25%)
- High P/E (36.35) and P/B (3.38) suggest expensive valuation
- Lower dividend yield (0.98%)
- Neutral ROIC (7.17%) and asset turnover (0.54)
- Moderate global diversification focused heavily on US
Zimmer Biomet Weaknesses
- Unfavorable ROE (7.25%) slightly above WACC (5.81%) but lower than peers
- Lower quick ratio (0.99) signals liquidity caution
- Unfavorable asset turnover (0.36) indicates less efficient asset use
- Dividend yield low (0.91%)
- Concentrated product reliance on knees and hips
Both companies show slightly favorable overall financial profiles but face challenges in shareholder returns and valuation. STERIS benefits from balanced revenue streams and strong liquidity, while Zimmer Biomet leverages geographic and product diversification. Each must address efficiency and profitability metrics to enhance long-term competitiveness.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only true barrier protecting long-term profits from relentless competitive erosion. Let’s dissect the core moats of these two med-tech players:
STERIS plc: Service Integration Moat
STERIS leverages high switching costs through its integrated sterilization and procedural services. Its stable 16% EBIT margin reflects operational efficiency. Expansion into contract sterilization deepens this advantage in 2026.
Zimmer Biomet Holdings, Inc.: Product Innovation Moat
Zimmer Biomet’s moat hinges on proprietary orthopedic implants and surgical tech, contrasting STERIS’s service model. Despite recent margin pressure, its growing ROIC signals innovation-driven resilience. New robotic surgeries offer fresh growth avenues.
Moat Battle: Service Integration vs. Product Innovation
Both firms currently shed value as ROIC trails WACC, yet their profitability improves. Zimmer Biomet’s faster ROIC growth and innovation pipeline suggest a deeper moat. I see Zimmer better poised to defend and expand market share.
Which stock offers better returns?
Over the past 12 months, STERIS plc climbed steadily with a 14.9% gain, while Zimmer Biomet Holdings, Inc. declined sharply by nearly 30%, illustrating divergent trading dynamics.
Trend Comparison
STERIS plc’s stock shows a bullish 14.9% rise over the past year, though momentum has decelerated recently with a 0.37% gain in the last 11 weeks. Volatility remains elevated with a 16.2% standard deviation.
Zimmer Biomet’s stock exhibits a bearish trend, falling 29.6% over the year with decelerating losses. Recent months saw a -4.4% drop amid lower volatility at 3.1%, reflecting sustained downward pressure.
STERIS outperformed Zimmer Biomet by a wide margin over 12 months. STERIS’s bullish trend contrasts sharply with Zimmer Biomet’s significant market decline.
Target Prices
Analyst consensus outlines a moderate upside potential for both STERIS plc and Zimmer Biomet Holdings, Inc.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| STERIS plc | 245 | 265 | 256.67 |
| Zimmer Biomet Holdings, Inc. | 86 | 130 | 108 |
STERIS plc trades near its target high at $264, suggesting limited upside. Zimmer Biomet’s consensus target of $108 implies a 22% potential gain above its current $88 price.
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How do institutions grade them?
STERIS plc Grades
The following table summarizes recent institutional grades for STERIS plc:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Morgan Stanley | Maintain | Overweight | 2025-08-08 |
| Keybanc | Maintain | Overweight | 2025-07-22 |
| Morgan Stanley | Upgrade | Overweight | 2025-07-15 |
| Morgan Stanley | Maintain | Equal Weight | 2025-05-19 |
| JMP Securities | Maintain | Market Outperform | 2025-05-16 |
| Stephens & Co. | Maintain | Overweight | 2025-05-15 |
| Morgan Stanley | Maintain | Equal Weight | 2025-05-12 |
| JMP Securities | Maintain | Market Outperform | 2025-04-10 |
| Needham | Maintain | Hold | 2025-04-07 |
| JMP Securities | Maintain | Market Outperform | 2025-02-06 |
Zimmer Biomet Holdings, Inc. Grades
The following table summarizes recent institutional grades for Zimmer Biomet Holdings, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | Maintain | Sell | 2026-01-28 |
| Bernstein | Maintain | Market Perform | 2026-01-09 |
| BTIG | Maintain | Buy | 2026-01-08 |
| Evercore ISI Group | Upgrade | Outperform | 2026-01-05 |
| Baird | Downgrade | Neutral | 2025-12-16 |
| Citigroup | Maintain | Neutral | 2025-12-11 |
| Canaccord Genuity | Maintain | Hold | 2025-11-10 |
| Barclays | Maintain | Underweight | 2025-11-06 |
| RBC Capital | Maintain | Outperform | 2025-11-06 |
| JP Morgan | Downgrade | Neutral | 2025-11-06 |
Which company has the best grades?
STERIS plc consistently receives positive grades such as Overweight and Market Outperform. Zimmer Biomet’s grades are mixed, including Sell and Neutral ratings. This divergence signals stronger institutional confidence in STERIS, potentially influencing investor sentiment and portfolio positioning.
Risks specific to each company
The following categories identify the critical pressure points and systemic threats facing both firms in the 2026 market environment:
1. Market & Competition
STERIS plc
- Operates in diverse sterilization and healthcare segments; faces competition from specialized medical device firms and service providers.
Zimmer Biomet Holdings, Inc.
- Focuses on musculoskeletal healthcare; competes strongly in orthopaedics with innovation-driven rivals and consolidation pressures.
2. Capital Structure & Debt
STERIS plc
- Low debt-to-equity (0.33) signals conservative leverage and strong interest coverage (10.23x).
Zimmer Biomet Holdings, Inc.
- Higher leverage (0.5 debt-to-equity) weakens financial flexibility despite acceptable interest coverage (5.76x).
3. Stock Volatility
STERIS plc
- Beta near 1.04 suggests market-level volatility and moderate investor risk appetite.
Zimmer Biomet Holdings, Inc.
- Lower beta (0.61) indicates reduced volatility, appealing to conservative investors.
4. Regulatory & Legal
STERIS plc
- Subject to stringent healthcare and sterilization regulations globally; risk of compliance costs and delays.
Zimmer Biomet Holdings, Inc.
- Heavily regulated orthopaedic and surgical device approvals; ongoing legal risks in product liability remain significant.
5. Supply Chain & Operations
STERIS plc
- Complex global sterilization operations may face supply disruptions; dependency on pharmaceutical and hospital clients.
Zimmer Biomet Holdings, Inc.
- Manufacturing and distribution of orthopaedic implants vulnerable to supply chain bottlenecks and raw material inflation.
6. ESG & Climate Transition
STERIS plc
- Growing pressure to reduce environmental impact of sterilization chemicals and energy usage.
Zimmer Biomet Holdings, Inc.
- Faces challenges integrating ESG into manufacturing and product lifecycle, with rising investor scrutiny.
7. Geopolitical Exposure
STERIS plc
- Operations primarily global with exposure to EU and Asia-Pacific regulatory shifts and trade tensions.
Zimmer Biomet Holdings, Inc.
- US-based with significant international sales; geopolitical tensions may impact supply chains and market access.
Which company shows a better risk-adjusted profile?
STERIS faces its biggest risk in capital structure prudence and operational complexity but benefits from stable leverage and solid liquidity. Zimmer Biomet’s highest risk lies in elevated debt levels combined with supply chain vulnerability. Despite Zimmer’s lower stock volatility, STERIS shows a better risk-adjusted profile due to stronger balance sheet metrics and higher Altman Z-Score (5.93 vs. 2.34), signaling far lower bankruptcy risk. Recent ratio data highlight Zimmer’s leverage as a red flag, justifying caution amid tightening credit conditions.
Final Verdict: Which stock to choose?
STERIS plc (STE) impresses as a cash-generating machine with steadily improving profitability and solid liquidity. Its rising ROIC amid a challenging cost of capital environment hints at strategic resilience. The main point of vigilance is its premium valuation, which could pressure returns. STE suits an aggressive growth portfolio seeking operational leverage.
Zimmer Biomet Holdings, Inc. (ZBH) builds a moat on its robust gross margins and a strong R&D pipeline, offering recurring revenue stability. While its balance sheet carries higher leverage, it provides more defensive stability compared to STE’s growth tilt. ZBH fits well within a GARP portfolio aiming for steady income with moderate growth.
If you prioritize growth fueled by operational efficiency and improving profitability, STE is the compelling choice due to its cash flow momentum and rising returns. However, if you seek better stability and a durable moat with consistent income, ZBH offers superior balance sheet strength and margin durability despite recent share price weakness. Both present analytical scenarios tailored to distinct investor profiles.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of STERIS plc and Zimmer Biomet Holdings, Inc. to enhance your investment decisions:
