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 $195.68, Zoetis Inc has witnessed a daily loss of 0.5%, marked against a three-month change of 9.9%. 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: 6/10
- Momentum rank: 10/10
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 slightly lower Financial Strength and GF Value rank, and high scores in Profitability, Growth, and Momentum, 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 $89.6 billion and sales of $8.544 billion, operates at an impressive operating margin of 35.92%. The company is a leader in animal health, providing a range of products including anti-infectives, vaccines, parasiticides, diagnostics, and other health products for animals. Zoetis Inc generates approximately 35% of its total revenue from production animals and nearly 65% from companion animals. The U.S. business is heavily skewed toward companion animals, while its international business is slightly skewed toward production animals. As the largest market share holder in the industry and formerly a part of Pfizer's animal health unit, Zoetis Inc stands out for its extensive product portfolio and global reach.
Financial Strength Breakdown
Zoetis Inc's Financial Strength rating reflects a solid balance sheet and prudent capital management. The company's Interest Coverage ratio of 12.84 indicates a strong ability to meet interest obligations, aligning with the principles of legendary investor Benjamin Graham. The Altman Z-Score of 8.28 further emphasizes Zoetis Inc's defense against financial distress. A Debt-to-Revenue ratio of 0.79 showcases the company's strategic debt management, reinforcing its financial health.
Profitability Rank Breakdown
The Profitability Rank of Zoetis Inc is exemplary, with an increasing Operating Margin over the past five years, indicating enhanced efficiency. The company's Gross Margin has also consistently risen, demonstrating its ability to convert revenue into profit effectively. Zoetis Inc's financial health is further validated by a strong Piotroski F-Score and a Predictability Rank of 4.0 stars, indicating reliable operational performance and investor confidence.
Growth Rank Breakdown
Zoetis Inc's high Growth Rank reflects its commitment to business expansion. The company's 3-Year Revenue Growth Rate of 9.8% surpasses 62.44% of competitors in the Drug Manufacturers industry. Zoetis Inc's EBITDA has also shown significant growth, with a three-year growth rate of 12.5 and a five-year rate of 12.1, highlighting its growth capabilities.
Conclusion: Zoetis Inc's Position for Outperformance
Considering Zoetis Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. With a strong foundation and strategic growth initiatives, Zoetis Inc is poised to continue its trajectory as a market leader. Investors seeking companies with similar potential can explore more options with the GF Score Screen provided by GuruFocus Premium membership.
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.
