Zoetis Inc. (ZTS) Fair Value & PE Analysis
Drug Manufacturers - Specialty & Generic · NYSE
Current Price
$71.55
PE Ratio (TTM)
11.8x
Intrinsic Value
$97.03
+26.3% margin of safety
What Is Zoetis Inc.'s Fair Value?
As of 2026-10-07, applying a 11.4x earnings multiple to Zoetis Inc.'s (ZTS) earnings per share of $6.26 yields a fair value estimate of $97.03 per share, versus a market price of $71.55.
Fair value from earnings multiples is sensitive to the multiple you choose. Across the sensitivity grid the estimate spans $73.47 to $124.37. This is a relative estimate anchored to earnings, not a statement of fact. For a cash flow based view, see the intrinsic value estimate on the DCF page.
How the PE model works · Recalculate in PE mode · ZTS intrinsic value (DCF view)
Is Zoetis Inc. (ZTS) Overvalued?
At $71.55, ZTS trades about 26.3% below its PE-based fair value estimate, a modest discount to its earnings power, though not enough to call it cheap outright.
COMPETITIVE MOAT
↑Dominant Animal Health Portfolio
Zoetis boasts a broad and deep portfolio of innovative medicines and vaccines. This extensive product range creates high switching costs for veterinarians and pet owners.
↑Strong R&D Pipeline
Significant investment in research and development fuels a continuous stream of new, patent-protected products. This innovation engine sustains market leadership and pricing power.
↑Global Veterinary Relationships
Decades of building trust and providing essential solutions have fostered deep relationships with veterinarians worldwide. This network loyalty is difficult for competitors to replicate.
INVESTMENT RISKS
↓Dependence on Key Markets
A substantial portion of Zoetis' revenue is derived from a few major geographic regions. Economic downturns or regulatory changes in these areas could disproportionately impact performance.
↓Supply Chain Disruptions
The manufacturing and distribution of animal health products are complex. Any disruptions to the supply chain, whether from geopolitical events or operational issues, could affect product availability.
↓Emerging Disease Outbreaks
While Zoetis benefits from disease prevention, widespread or novel animal disease outbreaks could strain production capacity or lead to unexpected demand shifts.
Base case
ZTS base case PE valuation
Intrinsic Value
$97.03
Margin of safety
+26.3%
Expected annual return
+6.3%
Base case assumptions: 8.5% annual earnings growth, 11.43x target PE, 10% discount rate, 5 year projection. Data as of 2026-10-07.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the ZTS PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Zoetis Inc. respond.
Open PE Calculator for ZTSCompany Overview
Zoetis Inc. stands as a global leader in animal health, focusing on the research, development, manufacturing, and commercialization of veterinary pharmaceuticals, vaccines, and diagnostic tools. Its comprehensive portfolio serves a broad spectrum of species, encompassing both livestock, including cattle, swine, poultry, fish, and sheep, and beloved companion animals such as dogs, cats, and horses. Among its pharmaceutical offerings are various therapeutic agents. This includes vaccines, vital for preventing respiratory, gastrointestinal, and reproductive diseases by stimulating a targeted immune response; anti-infectives that combat or inhibit the proliferation of bacterial, fungal, or protozoal pathogens; and parasiticides aimed at eradicating both internal and external pests such as fleas, ticks, and various worms. Additional pharmaceuticals address areas such as pain management and sedation, anti-emesis, reproductive health, and oncology. The portfolio also features dermatological solutions for allergic skin conditions and atopic dermatitis, alongside medicated feed additives specifically designed for livestock. Beyond therapeutics, Zoetis offers an extensive array of diagnostic solutions. These include portable analysis systems for blood and urine, point-of-care testing devices, specialized instruments and reagents, rapid immunoassay kits, comprehensive reference laboratory services, and blood glucose monitoring equipment. Further extending its reach, the company provides supplementary offerings such as nutritional products, agribusiness support services, biodevices, genetic testing, and innovations in precision animal health. Zoetis distributes its diverse product portfolio to a broad customer base, including veterinary professionals, livestock producers, and retail channels. This distribution occurs directly via its sales representatives and technical specialists, as well as through partnerships with third-party veterinary distributors. Established in 1952, the company maintains its corporate headquarters in Parsippany, New Jersey.
Financial Metrics — ZTS PE Stock Valuation Data
PE Ratio (TTM)
11.8x
PEG Ratio
2.63
Earnings Yield
8.76%
ROE (TTM)
69.3%
Revenue/Share (TTM)
$22.79
Dividend Yield
2.92%
Debt/Equity
2.93x
Frequently Asked Questions
What is the PE ratio of ZTS?
The trailing twelve-month PE ratio of ZTS reflects how much investors pay per dollar of Zoetis Inc.'s earnings. This metric is most useful when compared to Drug Manufacturers - Specialty & Generic peers and the company's own historical range.
Is ZTS overvalued based on PE ratio?
ZTS's PE of 11.8x combined with a PEG ratio of 2.63 provides a growth-adjusted perspective. A PEG above 2.0 means the P/E is high relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Drug Manufacturers - Specialty & Generic, a DCF analysis may be more appropriate.
How do I value ZTS stock using PE ratio?
To value Zoetis Inc. using PE: (1) Compare the current PE (11.8x) against the Drug Manufacturers - Specialty & Generic median to assess relative pricing, (2) check the PEG ratio (2.63) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of ZTS?
ZTS's PEG ratio is 2.63, calculated by dividing the PE ratio (11.8x) by the expected earnings growth rate. A PEG above 2.0 means the P/E is high relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for ZTS stock valuation?
PE ratio gives a quick relative read — how ZTS is priced versus Drug Manufacturers - Specialty & Generic peers. DCF provides an absolute value based on projected free cash flows. For ZTS, with a strong ROE of 69.3%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See ZTS DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Healthcare valuationsP/E and DCF value ZTS with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-10-07. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.