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 $171.36, Zoetis Inc has witnessed a daily gain of 0.28%, marked against a three-month change of -9.52%. A thorough analysis, underlined by the GF Score, suggests that Zoetis Inc is well-positioned for substantial growth in the near future.
What Is 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: 10/10
- GF Value rank: 7/10
- Momentum rank: 9/10
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 profitability and growth rank, and a slightly lower but still strong financial strength rank, GuruFocus assigned Zoetis Inc the GF Score of 97 out of 100, which signals the highest outperformance potential.
Understanding Zoetis Inc Business
Zoetis Inc, with a market cap of $78.67 billion and sales of $8.37 billion, is a leader in the animal health industry. The company boasts an impressive operating margin of 36.44% and is known for its diverse range of products including anti-infectives, vaccines, parasiticides, diagnostics, and other health products for animals. Approximately 35% of its total revenue comes from production animals, while companion animals contribute nearly 65%. Zoetis Inc has the largest market share in the industry and originated as Pfizer's animal health unit.
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 12.6, 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 7.82, Zoetis Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.81, 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 over the past five years, with the most recent figure at 36.24%. Furthermore, the company's Gross Margin has also seen a consistent rise, indicating growing efficiency in revenue conversion to profit. The Piotroski F-Score confirms Zoetis Inc's solid financial situation, and its 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 9.8%, which outperforms better than 62.6% of companies in the Drug Manufacturers industry. Moreover, Zoetis Inc has seen a robust increase in its EBITDA over the past few years, with a three-year growth rate of 12, highlighting the company's continued capability to drive growth.
Next Steps
Considering Zoetis Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. The company's strategic approach to managing its balance sheet, its increasing operational margins, and its commitment to growth are indicative of a business that is not only thriving in the present but is also well-equipped for future challenges and opportunities. Investors looking for a strong contender in the animal health sector may find Zoetis Inc an attractive option, as reflected in its exceptional GF Score.
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.
