ZOETIS INC (ZTS) Stock Fundamental Analysis
NYSE:ZTS - New York Stock Exchange, Inc. - US98978V1035 - Common Stock - Currency: USD
ZTS gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 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 decent growth rate and is not valued too expensively.
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.
ZTS had positive earnings in each of the past 5 years.
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 17.86%, ZTS belongs to the top of the industry, outperforming 97.94% of the companies in the same industry.
Looking at the Return On Equity, with a value of 54.09%, ZTS belongs to the top of the industry, outperforming 97.94% of the companies in the same industry.
The Return On Invested Capital of ZTS (25.63%) is better than 97.42% 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
ZTS has a better Profit Margin (27.12%) than 96.39% of its industry peers.
ZTS's Profit Margin has improved in the last couple of years.
ZTS's Operating Margin of 37.11% is amongst the best of the industry. ZTS outperforms 96.91% of its industry peers.
In the last couple of years the Operating Margin of ZTS has grown nicely.
The Gross Margin of ZTS (70.98%) is better than 79.38% 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ZTS is creating value.
The number of shares outstanding for ZTS has been reduced compared to 1 year ago.
ZTS has less shares outstanding than it did 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 7.23. This indicates that ZTS is financially healthy and has little risk of bankruptcy at the moment.
ZTS's Altman-Z score of 7.23 is amongst the best of the industry. ZTS outperforms 84.02% of its industry peers.
The Debt to FCF ratio of ZTS is 2.88, which is a good value as it means it would take ZTS, 2.88 years of fcf income to pay off all of its debts.
ZTS has a better Debt to FCF ratio (2.88) than 91.24% of its industry peers.
A Debt/Equity ratio of 1.12 is on the high side and indicates that ZTS has dependencies on debt financing.
With a Debt to Equity ratio value of 1.12, ZTS is not doing good in the industry: 72.16% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.12 | ||
| Debt/FCF | 2.88 | ||
| Altman-Z | 7.23 |
ROIC/WACC2.59
WACC9.91%
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 64.95% 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.
Looking at the Quick ratio, with a value of 1.04, ZTS is doing worse than 73.71% of the companies in the same industry.
| 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.
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.
The Revenue has been growing slightly by 6.32% in the past year.
The Revenue has been growing by 8.14% on average over the past years. This is quite good.
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
ZTS is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.50% yearly.
The Revenue is expected to grow by 5.61% on average over the next years.
EPS Next Y6.2%
EPS Next 2Y7.94%
EPS Next 3Y8.66%
EPS Next 5Y9.5%
Revenue Next Year2.47%
Revenue Next 2Y4.3%
Revenue Next 3Y4.86%
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.
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
With a Price/Earnings ratio of 25.27, ZTS can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of ZTS indicates a rather cheap valuation: ZTS is cheaper than 81.96% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.04, ZTS is valued at the same level.
ZTS is valuated rather expensively with a Price/Forward Earnings ratio of 22.06.
Based on the Price/Forward Earnings ratio, ZTS is valued a bit cheaper than the industry average as 73.20% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 37.64. ZTS is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.27 | ||
| Fwd PE | 22.06 |
4.2 Price Multiples
ZTS's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ZTS is cheaper than 80.41% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ZTS is valued a bit cheaper than 79.90% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 29.69 | ||
| EV/EBITDA | 18.52 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
ZTS has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)4.08
PEG (5Y)2.47
EPS Next 2Y7.94%
EPS Next 3Y8.66%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.30%, ZTS has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 4.01, ZTS pays a better dividend. On top of this ZTS pays more dividend than 90.72% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.31, ZTS's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.3% |
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.
The dividend of ZTS is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP32.25%
EPS Next 2Y7.94%
EPS Next 3Y8.66%
152.12
-0.7 (-0.46%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners96.42%
Inst Owner Change-0.61%
Ins Owners0.06%
Ins Owner Change5.03%
Market Cap67.73B
Analysts80.83
Price Target200.66 (31.91%)
Short Float %2.06%
Short Ratio3.05
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.3% |
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)-0.16%
PT rev (3m)-3.32%
EPS NQ rev (1m)0%
EPS NQ rev (3m)0.89%
EPS NY rev (1m)-0.07%
EPS NY rev (3m)1.73%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.12%
Revenue NY rev (1m)-0.09%
Revenue NY rev (3m)1.26%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.27 | ||
| Fwd PE | 22.06 | ||
| P/S | 7.29 | ||
| P/FCF | 29.69 | ||
| P/OCF | 23 | ||
| P/B | 14.55 | ||
| P/tB | 79.03 | ||
| EV/EBITDA | 18.52 |
EPS(TTM)6.02
EY3.96%
EPS(NY)6.9
Fwd EY4.53%
FCF(TTM)5.12
FCFY3.37%
OCF(TTM)6.61
OCFY4.35%
SpS20.86
BVpS10.46
TBVpS1.92
PEG (NY)4.08
PEG (5Y)2.47
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 | 7.23 |
F-Score8
WACC9.91%
ROIC/WACC2.59
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 Y6.2%
EPS Next 2Y7.94%
EPS Next 3Y8.66%
EPS Next 5Y9.5%
Revenue 1Y (TTM)6.32%
Revenue growth 3Y5.98%
Revenue growth 5Y8.14%
Sales Q2Q%1.37%
Revenue Next Year2.47%
Revenue Next 2Y4.3%
Revenue Next 3Y4.86%
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%