Zoetis Inc (ZTS, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $165.95, Zoetis Inc has witnessed a daily gain of 2.07%, marked against a three-month change of 0.93%. A thorough analysis, underlined by the GF Score, suggests that Zoetis Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 10/10
- Growth rank: 9/10
- GF Value rank: 10/10
- Momentum rank: 5/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high GF Score of 94 out of 100, Zoetis Inc signals the highest outperformance potential.
Company Overview: Zoetis Inc
Zoetis Inc, with a market capitalization of $73.88 billion, is a leading player in the animal health industry. The company sells anti-infectives, vaccines, parasiticides, diagnostics, and other health products for animals. Zoetis Inc earns roughly 35% of its total revenue from production animals such as cattle, pigs, and poultry, while nearly 65% comes from companion animal products like those for dogs, horses, and cats. The company's U.S. business is more heavily skewed toward companion animals, whereas its international operations lean slightly toward production animals. Zoetis Inc, previously Pfizer's animal health unit, holds the largest market share in the industry.
This is the income breakdown of Zoetis Inc: 
Financial Strength Breakdown
According to the Financial Strength rating, Zoetis Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Zoetis Inc stands impressively at 15.55, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5.
With an Altman Z-Score of 7.5, Zoetis Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.73, Zoetis Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Zoetis Inc's impressive standing among its peers in generating profit. Zoetis Inc's Operating Margin has increased by 7.81% over the past five years, as shown by the following data: 2020: 33.99; 2021: 36.05; 2022: 36.24; 2023: 35.92; 2024: 36.65.
Furthermore, Zoetis Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2020: 69.18; 2021: 70.38; 2022: 69.63; 2023: 70.03; 2024: 70.62. This trend underscores the company's growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms Zoetis Inc's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding, and operating efficiency.
Zoetis Inc's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Zoetis Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 7.7%, which outperforms better than 60% of 915 companies in the Drug Manufacturers industry.
Moreover, Zoetis Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 8.5, and the rate over the past five years is 11.2. This trend accentuates the company's continued capability to drive growth.
Conclusion: Zoetis Inc's Path to Outperformance
Zoetis Inc's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's unparalleled position for potential outperformance. The company's strategic initiatives, robust financial health, and consistent growth trajectory make it a compelling choice for value investors seeking long-term gains. As Zoetis Inc continues to leverage its market leadership and innovative capabilities, it stands poised to deliver substantial returns to its shareholders.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
