ZOETIS INC (ZTS) Stock Fundamental Analysis
NYSE:ZTS - New York Stock Exchange, Inc. - US98978V1035 - Common Stock - Currency: USD
Overall ZTS gets a fundamental rating of 6 out of 10. We evaluated ZTS against 198 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
In the past year ZTS was profitable.
In the past year ZTS had a positive cash flow from operations.
In the past 5 years ZTS has always been profitable.
In the past 5 years ZTS always reported a positive cash flow from operatings.
1.2 Ratios
With an excellent Return On Assets value of 17.46%, ZTS belongs to the best of the industry, outperforming 97.47% of the companies in the same industry.
ZTS has a Return On Equity of 52.12%. This is amongst the best in the industry. ZTS outperforms 97.98% of its industry peers.
The Return On Invested Capital of ZTS (24.98%) is better than 96.46% 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 41.61%.
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
Looking at the Profit Margin, with a value of 26.86%, ZTS belongs to the top of the industry, outperforming 96.46% of the companies in the same industry.
In the last couple of years the Profit Margin of ZTS has grown nicely.
Looking at the Operating Margin, with a value of 36.66%, ZTS belongs to the top of the industry, outperforming 95.96% of the companies in the same industry.
ZTS's Operating Margin has improved in the last couple of years.
ZTS has a Gross Margin of 70.68%. This is in the better half of the industry: ZTS outperforms 76.77% 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
The debt/assets ratio for ZTS is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 7.25 indicates that ZTS is not in any danger for bankruptcy at the moment.
ZTS has a Altman-Z score of 7.25. This is amongst the best in the industry. ZTS outperforms 86.87% 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.
ZTS has a better Debt to FCF ratio (2.86) than 90.91% 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.
Looking at the Debt to Equity ratio, with a value of 1.09, ZTS is doing worse than 71.21% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.09 | ||
| Debt/FCF | 2.86 | ||
| Altman-Z | 7.25 |
ROIC/WACC2.68
WACC9.33%
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 64.14% 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: 74.24% 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
The Earnings Per Share has grown by an nice 11.28% over the past year.
The Earnings Per Share has been growing by 10.22% on average over the past years. This is quite good.
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
ZTS is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.07% yearly.
Based on estimates for the next years, ZTS will show a small growth in Revenue. The Revenue will grow by 5.57% on average per year.
EPS Next Y4.39%
EPS Next 2Y8.03%
EPS Next 3Y8.66%
EPS Next 5Y10.07%
Revenue Next Year1.27%
Revenue Next 2Y3.91%
Revenue Next 3Y4.49%
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
ZTS is valuated quite expensively with a Price/Earnings ratio of 26.42.
81.31% of the companies in the same industry are more expensive than ZTS, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 28.88. ZTS is around the same levels.
A Price/Forward Earnings ratio of 25.31 indicates a quite expensive valuation of ZTS.
Based on the Price/Forward Earnings ratio, ZTS is valued cheaply inside the industry as 80.30% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 21.20. ZTS is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.42 | ||
| Fwd PE | 25.31 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ZTS is valued a bit cheaper than the industry average as 79.29% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, ZTS is valued cheaply inside the industry as 80.30% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.36 | ||
| EV/EBITDA | 19.11 |
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)6.02
PEG (5Y)2.59
EPS Next 2Y8.03%
EPS Next 3Y8.66%
5. Dividend
5.1 Amount
ZTS has a Yearly Dividend Yield of 1.31%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 4.58, ZTS pays a better dividend. On top of this ZTS pays more dividend than 90.40% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.45, ZTS's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.31% |
5.2 History
The dividend of ZTS is nicely growing with an annual growth rate of 21.42%!
ZTS has paid a dividend for at least 10 years, which is 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
ZTS pays out 31.62% of its income as dividend. This is a 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 2Y8.03%
EPS Next 3Y8.66%
156.4
+0.97 (+0.62%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners95.58%
Inst Owner Change0.66%
Ins Owners0.06%
Ins Owner Change5.36%
Market Cap69.76B
Analysts81.67
Price Target206.48 (32.02%)
Short Float %1.74%
Short Ratio2.52
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.31% |
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)-1.67%
PT rev (3m)-6.71%
EPS NQ rev (1m)-0.07%
EPS NQ rev (3m)-4.05%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)-4.13%
Revenue NQ rev (1m)-0.05%
Revenue NQ rev (3m)-3.48%
Revenue NY rev (1m)0.46%
Revenue NY rev (3m)-3.43%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.42 | ||
| Fwd PE | 25.31 | ||
| P/S | 7.54 | ||
| P/FCF | 30.36 | ||
| P/OCF | 23.62 | ||
| P/B | 14.63 | ||
| P/tB | 75.91 | ||
| EV/EBITDA | 19.11 |
EPS(TTM)5.92
EY3.79%
EPS(NY)6.18
Fwd EY3.95%
FCF(TTM)5.15
FCFY3.29%
OCF(TTM)6.62
OCFY4.23%
SpS20.75
BVpS10.69
TBVpS2.06
PEG (NY)6.02
PEG (5Y)2.59
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 | 7.25 |
F-Score8
WACC9.33%
ROIC/WACC2.68
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 Y4.39%
EPS Next 2Y8.03%
EPS Next 3Y8.66%
EPS Next 5Y10.07%
Revenue 1Y (TTM)8.33%
Revenue growth 3Y5.98%
Revenue growth 5Y8.14%
Sales Q2Q%4.7%
Revenue Next Year1.27%
Revenue Next 2Y3.91%
Revenue Next 3Y4.49%
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%