Take This Into Account Before Investing in ZTS

Zoetis logged a -1.0% change during today's afternoon session, and is now trading at a price of $174.8 per share.

Zoetis returned gains of 20.0% last year, with its stock price reaching a high of $194.99 and a low of $140.76. Over the same period, the stock outperformed the S&P 500 index by 5.0%. More recently, the company's 50-day average price was $172.07. Zoetis Inc. discovers, develops, manufactures, and commercializes animal health medicines, vaccines, and diagnostic products in the United States and internationally. Based in Parsippany, NJ, the large-cap Health Care company has 13,800 full time employees. Zoetis has offered a 0.8% dividend yield over the last 12 months.

Growing Revenues With Increasing Reinvestment in the Business:

2018 2019 2020 2021 2022 2023
Revenue (MM) $5,825 $6,260 $6,675 $7,776 $8,080 $8,222
Gross Margins 67% 68% 69% 70% 70% 70%
Operating Margins 28.0% 28.0% 30.0% 32.0% 33.0% 34.0%
Net Margins 25.0% 24.0% 25.0% 26.0% 26.0% 27.0%
Net Income (MM) $1,428 $1,500 $1,638 $2,037 $2,114 $2,213
Net Interest Expense (MM) $206 $223 $231 $224 $221 $236
Depreciation & Amort. (MM) $308 $412 $441 $448 $465 $475
Earnings Per Share $2.93 $3.11 $3.42 $4.27 $4.49 $4.75
Diluted Shares (MM) 487 482 479 477 470 452
Free Cash Flow (MM) $1,452 $1,335 $1,673 $1,736 $1,326 $1,285
Capital Expenditures (MM) $338 $460 $453 $477 $586 $714
Net Current Assets (MM) -$4,193 -$4,089 -$3,225 -$2,426 -$3,016 -$2,945
Long Term Debt (MM) $6,443 $5,947 $6,595 $6,592 $6,552 $6,555
Net Debt / EBITDA 2.47 2.04 1.48 1.11 1.39 1.52

Zoetis benefits from growing revenues and increasing reinvestment in the business, strong margins with a stable trend, and wider gross margins than its peer group. The company's financial statements show positive EPS growth and healthy leverage. Furthermore, Zoetis has irregular cash flows.

Zoetis Has Elevated P/B and P/E Ratios:

Zoetis has a trailing twelve month P/E ratio of 35.0, compared to an average of 24.45 for the Health Care sector. Based on its EPS guidance of $6.04, the company has a forward P/E ratio of 28.5. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 8.4%. On this basis, the company's PEG ratio is 4.18, which suggests that it is overpriced. Furthermore, Zoetis is likely overvalued compared to the book value of its equity, since its P/B ratio of 15.82 is higher than the sector average of 4.16. The company's shares are currently trading 428.3% above their Graham number.

Zoetis Has an Average Rating of Buy:

The 10 analysts following Zoetis have set target prices ranging from $190.0 to $255.0 per share, for an average of $213.0 with a buy rating. As of April 2023, the company is trading -19.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Zoetis has a very low short interest because 0.7% of the company's shares are sold short. Institutions own 94.6% of the company's shares, and the insider ownership rate stands at 0.2%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $6,956,775,998.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.