ZOETIS INC (ZTS) Stock Fundamental Analysis
NYSE:ZTS - New York Stock Exchange, Inc. - US98978V1035 - Common Stock - Currency: USD
ZTS gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 195 industry peers in the Pharmaceuticals industry. ZTS scores excellent on profitability, but there are some minor concerns on its financial health. ZTS is not valued too expensively and it also shows a decent 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.
ZTS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 17.86%, ZTS belongs to the best of the industry, outperforming 97.95% of the companies in the same industry.
The Return On Equity of ZTS (54.09%) is better than 97.95% of its industry peers.
ZTS has a better Return On Invested Capital (25.63%) than 97.44% of its industry peers.
ZTS had an Average Return On Invested Capital over the past 3 years of 21.64%. This is significantly above the industry average of 14.87%.
The last Return On Invested Capital (25.63%) for ZTS is above the 3 year average (21.64%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.86% | ||
| ROE | 54.09% | ||
| ROIC | 25.63% |
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 27.12%, ZTS belongs to the top of the industry, outperforming 96.41% of the companies in the same industry.
ZTS's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 37.11%, ZTS belongs to the top of the industry, outperforming 96.92% 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 70.98%. This is in the better half of the industry: ZTS outperforms 79.49% of its industry peers.
In the last couple of years the Gross Margin of ZTS has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 37.11% | ||
| PM (TTM) | 27.12% | ||
| GM | 70.98% |
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), ZTS is creating value.
Compared to 1 year ago, ZTS has less shares outstanding
ZTS has less shares outstanding than it did 5 years ago.
ZTS has a worse debt/assets ratio than last year.
2.2 Solvency
ZTS has an Altman-Z score of 7.55. This indicates that ZTS is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 7.55, ZTS belongs to the top of the industry, outperforming 85.13% of the companies in the same industry.
ZTS has a debt to FCF ratio of 2.88. This is a good value and a sign of high solvency as ZTS would need 2.88 years to pay back of all of its debts.
ZTS has a Debt to FCF ratio of 2.88. This is amongst the best in the industry. ZTS outperforms 90.77% of its industry peers.
ZTS has a Debt/Equity ratio of 1.12. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of ZTS (1.12) is worse than 72.31% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.12 | ||
| Debt/FCF | 2.88 | ||
| Altman-Z | 7.55 |
ROIC/WACC2.64
WACC9.71%
2.3 Liquidity
A Current Ratio of 1.74 indicates that ZTS should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.74, ZTS is doing worse than 65.13% of the companies in the same industry.
A Quick Ratio of 1.04 indicates that ZTS should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.04, ZTS is not doing good in the industry: 73.85% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.74 | ||
| Quick Ratio | 1.04 |
3. Growth
3.1 Past
ZTS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 11.69%, which is quite good.
ZTS shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.22% yearly.
ZTS shows a small growth in Revenue. In the last year, the Revenue has grown by 6.32%.
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)11.69%
EPS 3Y8%
EPS 5Y10.22%
EPS Q2Q%7.25%
Revenue 1Y (TTM)6.32%
Revenue growth 3Y5.98%
Revenue growth 5Y8.14%
Sales Q2Q%1.37%
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 9.50% on average per year.
Based on estimates for the next years, ZTS will show a small growth in Revenue. The Revenue will grow by 5.61% on average per year.
EPS Next Y6.12%
EPS Next 2Y7.68%
EPS Next 3Y8.56%
EPS Next 5Y9.5%
Revenue Next Year2.57%
Revenue Next 2Y4.33%
Revenue Next 3Y4.81%
Revenue Next 5Y5.61%
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 27.31, the valuation of ZTS can be described as expensive.
Based on the Price/Earnings ratio, ZTS is valued cheaply inside the industry as 82.05% of the companies are valued more expensively.
ZTS's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 26.57.
With a Price/Forward Earnings ratio of 23.95, ZTS is valued on the expensive side.
ZTS's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. ZTS is cheaper than 71.28% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.41. ZTS is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.31 | ||
| Fwd PE | 23.95 |
4.2 Price Multiples
ZTS's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. ZTS is cheaper than 80.00% of the companies in the same industry.
ZTS's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. ZTS is cheaper than 80.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 32.08 | ||
| EV/EBITDA | 19.82 |
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)4.46
PEG (5Y)2.67
EPS Next 2Y7.68%
EPS Next 3Y8.56%
5. Dividend
5.1 Amount
ZTS has a Yearly Dividend Yield of 1.18%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.95, ZTS pays a better dividend. On top of this ZTS pays more dividend than 90.77% of the companies listed in the same industry.
With a Dividend Yield of 1.18, ZTS pays less dividend than the S&P500 average, which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.18% |
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
32.25% of the earnings are spent on dividend by ZTS. This is a low number and sustainable payout ratio.
ZTS's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP32.25%
EPS Next 2Y7.68%
EPS Next 3Y8.56%
164.38
+0.05 (+0.03%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners96.42%
Inst Owner Change0.83%
Ins Owners0.06%
Ins Owner Change5.02%
Market Cap73.18B
Analysts81.67
Price Target200.98 (22.27%)
Short Float %2.3%
Short Ratio3.45
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.18% |
Yearly Dividend1.73
Dividend Growth(5Y)21.42%
DP32.25%
Div Incr Years11
Div Non Decr Years11
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.4%
Min EPS beat(2)3.63%
Max EPS beat(2)5.17%
EPS beat(4)4
Avg EPS beat(4)5.06%
Min EPS beat(4)3.63%
Max EPS beat(4)7.51%
EPS beat(8)6
Avg EPS beat(8)2.6%
EPS beat(12)8
Avg EPS beat(12)2.24%
EPS beat(16)12
Avg EPS beat(16)3.55%
Revenue beat(2)1
Avg Revenue beat(2)0.05%
Min Revenue beat(2)-0.26%
Max Revenue beat(2)0.36%
Revenue beat(4)3
Avg Revenue beat(4)1.15%
Min Revenue beat(4)-0.26%
Max Revenue beat(4)3.33%
Revenue beat(8)4
Avg Revenue beat(8)0.48%
Revenue beat(12)5
Avg Revenue beat(12)-0.19%
Revenue beat(16)8
Avg Revenue beat(16)0.35%
PT rev (1m)-0.98%
PT rev (3m)-4.29%
EPS NQ rev (1m)0.24%
EPS NQ rev (3m)0.77%
EPS NY rev (1m)0%
EPS NY rev (3m)0.08%
Revenue NQ rev (1m)0.16%
Revenue NQ rev (3m)1.12%
Revenue NY rev (1m)0.13%
Revenue NY rev (3m)1.74%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.31 | ||
| Fwd PE | 23.95 | ||
| P/S | 7.88 | ||
| P/FCF | 32.08 | ||
| P/OCF | 24.85 | ||
| P/B | 15.72 | ||
| P/tB | 85.4 | ||
| EV/EBITDA | 19.82 |
EPS(TTM)6.02
EY3.66%
EPS(NY)6.86
Fwd EY4.18%
FCF(TTM)5.12
FCFY3.12%
OCF(TTM)6.61
OCFY4.02%
SpS20.86
BVpS10.46
TBVpS1.92
PEG (NY)4.46
PEG (5Y)2.67
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.86% | ||
| ROE | 54.09% | ||
| ROCE | 32.17% | ||
| ROIC | 25.63% | ||
| ROICexc | 30.53% | ||
| ROICexgc | 52.86% | ||
| OM | 37.11% | ||
| PM (TTM) | 27.12% | ||
| GM | 70.98% | ||
| FCFM | 24.56% |
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 Turnover0.66
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.12 | ||
| Debt/FCF | 2.88 | ||
| Debt/EBITDA | 1.33 | ||
| Cap/Depr | 135.51% | ||
| Cap/Sales | 7.15% | ||
| Interest Coverage | 12.58 | ||
| Cash Conversion | 74.82% | ||
| Profit Quality | 90.59% | ||
| Current Ratio | 1.74 | ||
| Quick Ratio | 1.04 | ||
| Altman-Z | 7.55 |
F-Score8
WACC9.71%
ROIC/WACC2.64
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)11.69%
EPS 3Y8%
EPS 5Y10.22%
EPS Q2Q%7.25%
EPS Next Y6.12%
EPS Next 2Y7.68%
EPS Next 3Y8.56%
EPS Next 5Y9.5%
Revenue 1Y (TTM)6.32%
Revenue growth 3Y5.98%
Revenue growth 5Y8.14%
Sales Q2Q%1.37%
Revenue Next Year2.57%
Revenue Next 2Y4.33%
Revenue Next 3Y4.81%
Revenue Next 5Y5.61%
EBIT growth 1Y9.64%
EBIT growth 3Y6.4%
EBIT growth 5Y10.78%
EBIT Next Year16.87%
EBIT Next 3Y10.58%
EBIT Next 5Y9.07%
FCF growth 1Y56.45%
FCF growth 3Y9.8%
FCF growth 5Y11.47%
OCF growth 1Y36.85%
OCF growth 3Y10.09%
OCF growth 5Y10.47%