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 $164.48, Zoetis Inc has witnessed a daily gain of 3.83%, marked against a three-month change of -14.18%. 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: 9/10
- 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 high ranks in profitability and growth, and a slightly lower momentum rank, GuruFocus assigned Zoetis Inc the GF Score of 96 out of 100, which signals the highest outperformance potential.
Understanding Zoetis Inc's Business
Zoetis Inc, with a market cap of $75.16 billion and sales of $8.54 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. With the largest market share in the industry, Zoetis Inc was previously a part of Pfizer's animal health unit, and it has a balanced revenue stream from both U.S. and international markets.
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 12.84, 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 7.39, Zoetis Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.79, 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 a current margin of 35.92%. Additionally, the company's Gross Margin has also seen a consistent rise, currently at 70.03%. 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 60.41% 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 12.5%. This trend accentuates 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. Investors looking for similar opportunities can explore more companies with strong GF Scores using the GF Score Screen. With its solid financial foundation and growth prospects, Zoetis Inc stands as a compelling investment case for those seeking market outperformance and growth potential.
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.
