ZOETIS INC (ZTS) Stock Fundamental Analysis
NYSE:ZTS - New York Stock Exchange, Inc. - US98978V1035 - Common Stock - Currency: USD
Taking everything into account, ZTS scores 6 out of 10 in our fundamental rating. ZTS was compared to 194 industry peers in the Pharmaceuticals industry. While ZTS has a great profitability rating, 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.
In the past year ZTS had a positive cash flow from operations.
Each year in the past 5 years ZTS has been profitable.
ZTS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 17.46%, ZTS belongs to the top of the industry, outperforming 97.84% of the companies in the same industry.
With an excellent Return On Equity value of 52.12%, ZTS belongs to the best of the industry, outperforming 97.84% of the companies in the same industry.
ZTS has a Return On Invested Capital of 24.98%. This is amongst the best in the industry. ZTS outperforms 97.30% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ZTS is significantly below the industry average of 44.04%.
The last Return On Invested Capital (24.98%) for ZTS is above the 3 year average (21.64%), which is a sign of increasing profitability.
| 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
With an excellent Profit Margin value of 26.86%, ZTS belongs to the best of the industry, outperforming 95.68% of the companies in the same industry.
In the last couple of years the Profit Margin of ZTS has grown nicely.
The Operating Margin of ZTS (36.66%) is better than 96.76% of its industry peers.
In the last couple of years the Operating Margin of ZTS has grown nicely.
The Gross Margin of ZTS (70.68%) is better than 75.68% of its industry peers.
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
ZTS has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, ZTS has less shares outstanding
Compared to 5 years ago, ZTS has less shares outstanding
ZTS has a worse debt/assets ratio than last year.
2.2 Solvency
ZTS has an Altman-Z score of 7.33. This indicates that ZTS is financially healthy and has little risk of bankruptcy at the moment.
ZTS has a better Altman-Z score (7.33) than 84.86% of its industry peers.
The Debt to FCF ratio of ZTS is 2.86, which is a good value as it means it would take ZTS, 2.86 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 2.86, ZTS belongs to the top of the industry, outperforming 91.89% of the companies in the same industry.
A Debt/Equity ratio of 1.09 is on the high side and indicates that ZTS has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 1.09, ZTS is doing worse than 75.14% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.09 | ||
| Debt/FCF | 2.86 | ||
| Altman-Z | 7.33 |
ROIC/WACC2.61
WACC9.58%
2.3 Liquidity
A Current Ratio of 1.75 indicates that ZTS should not have too much problems paying its short term obligations.
With a Current ratio value of 1.75, ZTS is not doing good in the industry: 64.86% of the companies in the same industry are doing better.
A Quick Ratio of 1.08 indicates that ZTS should not have too much problems paying its short term obligations.
ZTS has a worse Quick ratio (1.08) than 77.84% of its industry peers.
| 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.
Looking at the last year, ZTS shows a quite strong growth in Revenue. The Revenue has grown by 8.33% in the last year.
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
The Earnings Per Share is expected to grow by 9.32% on average over the next years. This is quite good.
ZTS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.06% yearly.
EPS Next Y6.03%
EPS Next 2Y8.49%
EPS Next 3Y9.38%
EPS Next 5Y9.32%
Revenue Next Year2.28%
Revenue Next 2Y4.4%
Revenue Next 3Y5.05%
Revenue Next 5Y6.06%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 27.10, 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 81.62% of the companies listed in the same industry.
ZTS is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 29.63, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 25.56, the valuation of ZTS can be described as expensive.
Based on the Price/Forward Earnings ratio, ZTS is valued a bit cheaper than the industry average as 80.00% of the companies are valued more expensively.
ZTS is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.68, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.1 | ||
| Fwd PE | 25.56 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ZTS is valued cheaper than 80.54% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ZTS is valued cheaply inside the industry as 82.16% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.5 | ||
| EV/EBITDA | 19.44 |
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.
The excellent profitability rating of ZTS may justify a higher PE ratio.
PEG (NY)4.49
PEG (5Y)2.65
EPS Next 2Y8.49%
EPS Next 3Y9.38%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.28%, 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 4.35. ZTS pays more dividend than 90.27% of the companies in the same industry.
With a Dividend Yield of 1.28, ZTS pays less dividend than the S&P500 average, which is at 2.29.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.28% |
5.2 History
The dividend of ZTS is nicely growing with an annual growth rate of 21.42%!
ZTS has been paying a dividend for at least 10 years, so it has a reliable track record.
ZTS has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)21.42%
Div Incr Years11
Div Non Decr Years11
5.3 Sustainability
31.62% of the earnings are spent on dividend by ZTS. This is a low number and sustainable payout ratio.
The dividend of ZTS is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP31.62%
EPS Next 2Y8.49%
EPS Next 3Y9.38%
160.46
+3.04 (+1.93%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners95.58%
Inst Owner Change-0.9%
Ins Owners0.06%
Ins Owner Change3.11%
Market Cap72.39B
Analysts81.6
Price Target213.07 (32.79%)
Short Float %1.91%
Short Ratio3.04
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.28% |
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)-2.1%
PT rev (3m)-2.82%
EPS NQ rev (1m)-2.56%
EPS NQ rev (3m)-2.62%
EPS NY rev (1m)-0.05%
EPS NY rev (3m)0.32%
Revenue NQ rev (1m)-0.6%
Revenue NQ rev (3m)-0.68%
Revenue NY rev (1m)-0.02%
Revenue NY rev (3m)0.25%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.1 | ||
| Fwd PE | 25.56 | ||
| P/S | 7.82 | ||
| P/FCF | 31.5 | ||
| P/OCF | 24.52 | ||
| P/B | 15.18 | ||
| P/tB | 78.78 | ||
| EV/EBITDA | 19.44 |
EPS(TTM)5.92
EY3.69%
EPS(NY)6.28
Fwd EY3.91%
FCF(TTM)5.09
FCFY3.17%
OCF(TTM)6.55
OCFY4.08%
SpS20.52
BVpS10.57
TBVpS2.04
PEG (NY)4.49
PEG (5Y)2.65
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 | 7.33 |
F-Score8
WACC9.58%
ROIC/WACC2.61
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 Y6.03%
EPS Next 2Y8.49%
EPS Next 3Y9.38%
EPS Next 5Y9.32%
Revenue 1Y (TTM)8.33%
Revenue growth 3Y5.98%
Revenue growth 5Y8.14%
Sales Q2Q%4.7%
Revenue Next Year2.28%
Revenue Next 2Y4.4%
Revenue Next 3Y5.05%
Revenue Next 5Y6.06%
EBIT growth 1Y9.31%
EBIT growth 3Y6.4%
EBIT growth 5Y10.78%
EBIT Next Year21.51%
EBIT Next 3Y11.99%
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%