With the stock trading at about $28 as of this writing, Biomet doesn’t look like much of a value under this set of assumptions. However, maybe we’re being too conservative by forecasting that a competitor will start eating Biomet’s lunch in just five years. Moreover, it might not be reasonable to assume that a firm in an industry as young and robust as orthopedic devices will be growing at just 3 percent after a decade. That’s a really low growth rate—in line with the overall economy—and it’s entirely possible that Biomet will still be growing at an above-average rate in 10 years’ time.
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