ZOETIS INC (ZTS) Stock Fundamental Analysis
NYSE:ZTS - New York Stock Exchange, Inc. - US98978V1035 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to ZTS. ZTS was compared to 197 industry peers in the Pharmaceuticals industry. While ZTS belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. ZTS has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
ZTS had positive earnings in the past year.
ZTS had a positive operating cash flow in the past year.
In the past 5 years ZTS has always been profitable.
Each year in the past 5 years ZTS had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 17.46%, ZTS belongs to the top of the industry, outperforming 97.97% of the companies in the same industry.
ZTS's Return On Equity of 52.12% is amongst the best of the industry. ZTS outperforms 97.97% of its industry peers.
ZTS has a better Return On Invested Capital (24.98%) than 96.95% of its industry peers.
ZTS had an Average Return On Invested Capital over the past 3 years of 21.64%. This is significantly below the industry average of 40.40%.
The 3 year average ROIC (21.64%) for ZTS is below the current ROIC(24.98%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.46% | ||
| ROE | 52.12% | ||
| ROIC | 24.98% |
ROA(3y)16.01%
ROA(5y)14.94%
ROE(3y)49.01%
ROE(5y)47.06%
ROIC(3y)21.64%
ROIC(5y)19.86%
1.3 Margins
ZTS has a Profit Margin of 26.86%. This is amongst the best in the industry. ZTS outperforms 96.95% of its industry peers.
In the last couple of years the Profit Margin of ZTS has grown nicely.
The Operating Margin of ZTS (36.66%) is better than 96.45% of its industry peers.
In the last couple of years the Operating Margin of ZTS has grown nicely.
With a decent Gross Margin value of 70.68%, ZTS is doing good in the industry, outperforming 76.65% of the companies in the same industry.
ZTS's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 36.66% | ||
| PM (TTM) | 26.86% | ||
| GM | 70.68% |
OM growth 3Y0.39%
OM growth 5Y2.44%
PM growth 3Y0.84%
PM growth 5Y2.31%
GM growth 3Y0.03%
GM growth 5Y0.65%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ZTS is creating value.
ZTS has less shares outstanding than it did 1 year ago.
The number of shares outstanding for ZTS has been reduced compared to 5 years ago.
Compared to 1 year ago, ZTS has a worse debt to assets ratio.
2.2 Solvency
ZTS has an Altman-Z score of 7.03. This indicates that ZTS is financially healthy and has little risk of bankruptcy at the moment.
ZTS's Altman-Z score of 7.03 is amongst the best of the industry. ZTS outperforms 87.82% of its industry peers.
ZTS has a debt to FCF ratio of 2.86. This is a good value and a sign of high solvency as ZTS would need 2.86 years to pay back of all of its debts.
The Debt to FCF ratio of ZTS (2.86) is better than 91.88% of its industry peers.
A Debt/Equity ratio of 1.09 is on the high side and indicates that ZTS has dependencies on debt financing.
With a Debt to Equity ratio value of 1.09, ZTS is not doing good in the industry: 72.59% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.09 | ||
| Debt/FCF | 2.86 | ||
| Altman-Z | 7.03 |
ROIC/WACC2.63
WACC9.49%
2.3 Liquidity
ZTS has a Current Ratio of 1.75. This is a normal value and indicates that ZTS is financially healthy and should not expect problems in meeting its short term obligations.
ZTS's Current ratio of 1.75 is on the low side compared to the rest of the industry. ZTS is outperformed by 64.47% of its industry peers.
A Quick Ratio of 1.08 indicates that ZTS should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.08, ZTS is not doing good in the industry: 74.62% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.75 | ||
| Quick Ratio | 1.08 |
3. Growth
3.1 Past
ZTS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 11.28%, which is quite good.
Measured over the past years, ZTS shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.22% on average per year.
ZTS shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 8.33%.
Measured over the past years, ZTS shows a quite strong growth in Revenue. The Revenue has been growing by 8.14% on average per year.
EPS 1Y (TTM)11.28%
EPS 3Y8%
EPS 5Y10.22%
EPS Q2Q%12.9%
Revenue 1Y (TTM)8.33%
Revenue growth 3Y5.98%
Revenue growth 5Y8.14%
Sales Q2Q%4.7%
3.2 Future
Based on estimates for the next years, ZTS will show a quite strong growth in Earnings Per Share. The EPS will grow by 10.07% on average per year.
The Revenue is expected to grow by 5.57% on average over the next years.
EPS Next Y4.4%
EPS Next 2Y8.06%
EPS Next 3Y8.73%
EPS Next 5Y10.07%
Revenue Next Year1.2%
Revenue Next 2Y3.86%
Revenue Next 3Y4.54%
Revenue Next 5Y5.57%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 25.11, the valuation of ZTS can be described as expensive.
Compared to the rest of the industry, the Price/Earnings ratio of ZTS indicates a rather cheap valuation: ZTS is cheaper than 81.73% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 28.29. ZTS is around the same levels.
With a Price/Forward Earnings ratio of 24.05, ZTS is valued on the expensive side.
79.70% of the companies in the same industry are more expensive than ZTS, based on the Price/Forward Earnings ratio.
ZTS is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.08, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.11 | ||
| Fwd PE | 24.05 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ZTS indicates a somewhat cheap valuation: ZTS is cheaper than 79.70% of the companies listed in the same industry.
ZTS's Price/Free Cash Flow ratio is rather cheap when compared to the industry. ZTS is cheaper than 80.71% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.86 | ||
| EV/EBITDA | 18.23 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ZTS does not grow enough to justify the current Price/Earnings ratio.
ZTS has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)5.71
PEG (5Y)2.46
EPS Next 2Y8.06%
EPS Next 3Y8.73%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.35%, ZTS has a reasonable but not impressive dividend return.
ZTS's Dividend Yield is rather good when compared to the industry average which is at 4.50. ZTS pays more dividend than 90.86% of the companies in the same industry.
With a Dividend Yield of 1.35, ZTS pays less dividend than the S&P500 average, which is at 2.52.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.35% |
5.2 History
On average, the dividend of ZTS grows each year by 21.42%, which is quite nice.
ZTS has paid a dividend for at least 10 years, which is a reliable track record.
ZTS has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)21.42%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
ZTS pays out 31.62% of its income as dividend. This is a sustainable payout ratio.
ZTS's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP31.62%
EPS Next 2Y8.06%
EPS Next 3Y8.73%
148.67
+1.91 (+1.3%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners95.58%
Inst Owner Change0%
Ins Owners0.06%
Ins Owner Change5.36%
Market Cap66.32B
Analysts81.67
Price Target207.56 (39.61%)
Short Float %1.46%
Short Ratio2.03
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.35% |
Yearly Dividend1.73
Dividend Growth(5Y)21.42%
DP31.62%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.57%
Min EPS beat(2)3.63%
Max EPS beat(2)7.51%
EPS beat(4)4
Avg EPS beat(4)4.33%
Min EPS beat(4)2.28%
Max EPS beat(4)7.51%
EPS beat(8)6
Avg EPS beat(8)2.31%
EPS beat(12)8
Avg EPS beat(12)2.31%
EPS beat(16)12
Avg EPS beat(16)4.55%
Revenue beat(2)1
Avg Revenue beat(2)1.54%
Min Revenue beat(2)-0.26%
Max Revenue beat(2)3.33%
Revenue beat(4)3
Avg Revenue beat(4)1.48%
Min Revenue beat(4)-0.26%
Max Revenue beat(4)3.33%
Revenue beat(8)3
Avg Revenue beat(8)0.23%
Revenue beat(12)4
Avg Revenue beat(12)-0.28%
Revenue beat(16)8
Avg Revenue beat(16)0.77%
PT rev (1m)-1.16%
PT rev (3m)-6.22%
EPS NQ rev (1m)-0.02%
EPS NQ rev (3m)-4.05%
EPS NY rev (1m)-1.54%
EPS NY rev (3m)-4.12%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-3.48%
Revenue NY rev (1m)0.38%
Revenue NY rev (3m)-3.61%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.11 | ||
| Fwd PE | 24.05 | ||
| P/S | 7.16 | ||
| P/FCF | 28.86 | ||
| P/OCF | 22.46 | ||
| P/B | 13.9 | ||
| P/tB | 72.16 | ||
| EV/EBITDA | 18.23 |
EPS(TTM)5.92
EY3.98%
EPS(NY)6.18
Fwd EY4.16%
FCF(TTM)5.15
FCFY3.47%
OCF(TTM)6.62
OCFY4.45%
SpS20.75
BVpS10.69
TBVpS2.06
PEG (NY)5.71
PEG (5Y)2.46
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.46% | ||
| ROE | 52.12% | ||
| ROCE | 31.34% | ||
| ROIC | 24.98% | ||
| ROICexc | 30.58% | ||
| ROICexgc | 54.19% | ||
| OM | 36.66% | ||
| PM (TTM) | 26.86% | ||
| GM | 70.68% | ||
| FCFM | 24.83% |
ROA(3y)16.01%
ROA(5y)14.94%
ROE(3y)49.01%
ROE(5y)47.06%
ROIC(3y)21.64%
ROIC(5y)19.86%
ROICexc(3y)27.73%
ROICexc(5y)26.47%
ROICexgc(3y)50.54%
ROICexgc(5y)50.93%
ROCE(3y)27.16%
ROCE(5y)24.93%
ROICexcg growth 3Y2.53%
ROICexcg growth 5Y2.14%
ROICexc growth 3Y5.51%
ROICexc growth 5Y8.06%
OM growth 3Y0.39%
OM growth 5Y2.44%
PM growth 3Y0.84%
PM growth 5Y2.31%
GM growth 3Y0.03%
GM growth 5Y0.65%
F-Score8
Asset Turnover0.65
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.09 | ||
| Debt/FCF | 2.86 | ||
| Debt/EBITDA | 1.34 | ||
| Cap/Depr | 131.79% | ||
| Cap/Sales | 7.08% | ||
| Interest Coverage | 12.38 | ||
| Cash Conversion | 75.91% | ||
| Profit Quality | 92.44% | ||
| Current Ratio | 1.75 | ||
| Quick Ratio | 1.08 | ||
| Altman-Z | 7.03 |
F-Score8
WACC9.49%
ROIC/WACC2.63
Cap/Depr(3y)135.63%
Cap/Depr(5y)123.22%
Cap/Sales(3y)7.63%
Cap/Sales(5y)7.16%
Profit Quality(3y)74.77%
Profit Quality(5y)82.34%
High Growth Momentum
Growth
EPS 1Y (TTM)11.28%
EPS 3Y8%
EPS 5Y10.22%
EPS Q2Q%12.9%
EPS Next Y4.4%
EPS Next 2Y8.06%
EPS Next 3Y8.73%
EPS Next 5Y10.07%
Revenue 1Y (TTM)8.33%
Revenue growth 3Y5.98%
Revenue growth 5Y8.14%
Sales Q2Q%4.7%
Revenue Next Year1.2%
Revenue Next 2Y3.86%
Revenue Next 3Y4.54%
Revenue Next 5Y5.57%
EBIT growth 1Y9.31%
EBIT growth 3Y6.4%
EBIT growth 5Y10.78%
EBIT Next Year17.71%
EBIT Next 3Y10.54%
EBIT Next 5Y9.72%
FCF growth 1Y41.76%
FCF growth 3Y9.8%
FCF growth 5Y11.47%
OCF growth 1Y25.5%
OCF growth 3Y10.09%
OCF growth 5Y10.47%