Drug Manufacturers - Specialty & Generic · NYSE
Current Price
$113.83
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Zoetis Inc. with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Zoetis Inc. discovers, develops, manufactures, and commercializes animal health medicines, vaccines, and diagnostic products in the United States and internationally. It commercializes products primarily across species, including livestock, such as cattle, swine, poultry, fish, and sheep; and companion animals comprising dogs, cats, and horses. The company also offers vaccines, which are biological preparations to prevent diseases of the respiratory, gastrointestinal, and reproductive tracts or induce a specific immune response; anti-infectives that prevent, kill, or slow the growth of bacteria, fungi, or protozoa; and parasiticides that prevent or eliminate external and internal parasites, which include fleas, ticks, and worms. It also provides other pharmaceutical products that comprise pain and sedation, antiemetic, reproductive, and oncology products; dermatology products for itch associated with allergic conditions and atopic dermatitis; and medicated feed additives, which offer medicines to livestock. In addition, the company provides portable blood and urine analysis testing, including point-of-care diagnostic products, instruments and reagents, rapid immunoassay tests, reference laboratory kits and services, and blood glucose monitors; and other non-pharmaceutical products, including nutritionals and agribusiness services, as well as products and services in areas, such as biodevices, genetics tests, and precision animal health. It markets its products to veterinarians, livestock producers, and retail outlets, as well as third-party veterinary distributors through its sales representatives, and technical and veterinary operations specialists. The company was founded in 1952 and is headquartered in Parsippany, New Jersey.
ROIC (TTM)
21.5%
ROE (TTM)
58.2%
FCF Yield
4.75%
Based on trailing twelve-month data, ZTS shows a free cash flow per share of N/A and a ROIC of 21.5%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 4.75% are important context metrics when evaluating ZTS's stock valuation relative to peers.
The intrinsic value of ZTS depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether ZTS is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $113.83. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Zoetis Inc.: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Drug Manufacturers - Specialty & Generic industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting ZTS's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Zoetis Inc., this means projecting how much free cash flow the Drug Manufacturers - Specialty & Generic will produce over the next 5-10 years, then discounting those amounts to today's dollars. ZTS's ROIC of 21.5% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For ZTS, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
