Zoetis Inc. (ZTS) stock analysis

P/E below its 5-year median

Zoetis's P/E of 13.9 is below its own 5-year median of 33.7.

P/E below the industry

Zoetis's P/E of 13.9 is below the Drugs median of 25.1.

EV/EBITDA below its 5-year median

Zoetis's EV/EBITDA of 10.8 is below its 5-year median of 22.7.

P/B above the industry

Zoetis's price-to-book of 10.33 is above the Drugs median of 2.29.

Trading below fair value

The share price of $82.57 is below our fair value estimate of $153.20.

Margin of safety over 20%

The price is 46.1% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 5.4% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 10.3% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -4.7% over the last twelve months, against a 5-year average of 10.3% a year.

Growing slower than the industry

Revenue grew 0.9% over the last twelve months; the Drugs median is 8.0%.

Guidance lowered

Zoetis lowered its Full Year 2026 Organic operational results outlook on Aug 6, 2026.

Gross margin improving

Gross margin was 71.6% over the last twelve months, against 71.5% a year earlier.

Return on equity over 15%

Return on equity was 57.6% over the last twelve months and averaged 52.5% over five years.

Return on invested capital

Needs operating income and invested capital.

Return on equity above the industry

Zoetis's return on equity of 57.6% is above the Drugs median of -58.9%.

Earnings grew over 5 years

Net income grew 10.3% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 26.4% over the last twelve months, against a 5-year average of 27.0%.

Net margin above the industry

Zoetis's net margin of 26.4% is above the Drugs median of -53.0%.

High debt

Debt is 274% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 191% five years ago to 274%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 30.1% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 2.35 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.07; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Zoetis paid dividends worth 1.9% of the share price over the last twelve months.

Yield below Treasuries

The 1.9% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Zoetis yields 1.9%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Earnings cover

Needs dividends paid and net income.

Cash-flow cover

Needs dividends paid and free cash flow.